Neutral Citation: 1995 ONICDRG 91

File No. A-010589

ONTARIO INSURANCE COMMISSION

BETWEEN:

NANCY VINK

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Nancy Vink, was injured in a motor vehicle accident on August 17, 1993. She applied for and received statutory accident benefits from the Insurer, Co-Operators General Insurance Company ("Co-operators"), payable under Ontario Regulation 672.¹ Co-operators stopped paying weekly income benefits on February 24, 1994. The parties were unable to resolve their disputes through mediation, and Mrs. Vink applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mrs. Vink entitled to weekly income benefits under section 12, or to benefits under section 13 (benefit if no income), of the Schedule?

2. If Mrs. Vink is entitled to benefits under section 12, what is the correct amount of her weekly income benefit?

3. Is Co-operators entitled to deduct any amount from either benefit under section 15 of the Schedule and, if so, is Co-operators entitled to repayment of any benefits paid to Mrs. Vink, pursuant to subsection 27(1) of the Schedule?

The parties agreed at the hearing that Mrs. Vink met the "substantial disability" test for entitlement, under either section. In addition, during the hearing, Mrs. Vink withdrew her claim for a special award against Co-operators.

Mrs. Vink also claims interest on any amounts owing, and her expenses incurred in the hearing.

Result:

1. Mrs. Vink is entitled to weekly income benefits under section 12 of the Schedule.

2. The correct amount of her weekly income benefit is $185.60.

3. Co-operators is not entitled to deduct any amounts from the weekly income benefit.

Hearing:

The hearing was held in London, Ontario, on Wednesday, April 12, 1995, before me, David Evans, arbitrator.

Present at the Hearing:

Applicant:

Nancy Vink

Applicant's Representative:

Rodney Dale Barrister and Solicitor

Insurer's Representative:

Stephen Malach Barrister and Solicitor

Witnesses:

Mrs. Vink Mr. Vink Todd van Rees

Court Reporter:

Leila Palerma London Verbatim Reporting

Exhibits:

Exhibit 1

Handwritten statement of Mrs. Vink dated August 31, 1993

Exhibit 2

Application for Accident Benefits form signed August 31, 1993

Exhibit 3

Draft version of Associative Rehabilitation Inc. Report, at p.100 of Nancy Vink's Medical Brief

Exhibit 4

Final version of Associative Rehabilitation Inc. Report dated February 28, 1995, at Tab 9, Nancy Vink's Arbitration Brief

Exhibit 5

Insurer's Brief of Financial Documents

Exhibit 6

Curriculum vitae of Todd van Rees

Exhibit 7

Copy of letter from Homuth, Taylor, Pinder & McNeilly, Chartered Accountants, dated January 28, 1994

Exhibit 8

Calculations of Ceasing Expenses for the years ending January 31, 1994 and January 31, 1995

Evidence and Findings:

Background

At the time of the accident on August 17, 1993, Mrs. Vink was a farm wife and the mother of three young children. Mrs. Vink owns 49% of the shares of the family farm, Concrete Holsteins Inc. ("CHI"). Mr. Vink holds the remaining 51% of the shares. Neither spouse receives a salary from CHI. CHI's monthly $1,500 repayment on a shareholder loan covers household expenses. CHI owns and pays the expenses for the house itself and the farm vehicles, including the van Mrs. Vink was driving on the day of the accident.

Mrs. Vink claims a weekly benefit under section 13 of the Schedule ("benefit if no income") totalling $335. Co-operators alleges, on the contrary, that Mrs. Vink is entitled to a weekly income benefit under section 12 of the Schedule. The Insurer claims that Mrs. Vink was employed or self-employed prior to the accident.

The weekly benefits under sections 12 and 13 are mutually exclusive, as provided by the following qualification in paragraph 13(2)2:

2. [The insured person] must not be entitled to receive a benefit under section 12 at the time of the payment of a benefit under that section or, if entitled to a benefit under this section, he or she must be a primary caregiver as described in subsection (4) and have only income from self-employment from work in his or her home.

Whether the insurer pays a benefit under section 12 or section 13, section 15 of the Schedule provides that the insurer may deduct "...80 per cent of any income received or available from any occupation or employment following the accident."

Since Mrs. Vink had stated she worked approximately two hours a day on the farm, Co-operators initially paid her the minimum benefits of $185.60 under section 12. In February 1994, an accountant's report imputed to Mrs. Vink a proportion of the net income from the farm. The report imputed a larger income to Mrs. Vink, and therefore would have entitled her to a larger benefit, but the corresponding deduction under section 15 — for post-accident income received — reduced the section 12 benefit to $0.00. Co-operators seeks repayment of the benefits paid to February 23, 1994.

Counsel for Mrs. Vink submitted that Mrs. Vink was neither employed nor self-employed within the meaning of section 12. Alternatively, he submitted that she fell within the exception under section 13 for primary caregivers who have only income from self-employment from work in the home. He denied that she ever received any income from employment from the farm. He also denied she received a notional or "money's worth" income. As to post-accident income, he submitted that any gain Mrs. Vink received was as a shareholder — i.e., she received investment income, and not income from occupation or employment deductible under section 15.

Counsel for Co-operators submitted that a proportion of the farm's income should be attributed to Mrs. Vink, and that she also received income in kind, as she enjoyed the benefits of the house and the vehicles owned by CHI. He suggested that she was entitled to a weekly income benefit under section 12, and that as she did not fit within the primary caregiver exception under section 13, she is excluded from receiving the section 13 benefit.

The first issue, then, is whether Mrs. Vink was "employed or self-employed" at the time of the accident. If so, the next issue is whether she fits within the exception in paragraph 13(2)2 for those self-employed in the home.

"Employed or self-employed"

To use the words of Arbitrator Palmer in Sharma,² what is required is "an objective, reasoned interpretation of the individual circumstances" at the time of the accident.

Mrs. Vink had been working seven to eight hours a day helping run the farm, until her third child was born on January 14, 1993, some seven months before the accident. After the birth and until the accident, Mrs. Vink says she worked mostly in the house, except during the baby's nap time in the afternoon. In the statement Mrs. Vink gave to Co-operators (Exhibit 1), she stated that her farm work hours were limited to approximately two hours per day. Mr. Vink, during his cross-examination, agreed with a value of two or three hours per day. I find that Mrs. Vink worked approximately two hours a day on the farm. Of course, Mrs. Vink did this work every day, for a total of about 14 hours a week.

I believe Mrs. Vink's intentions at the time of the accident are important, although not necessarily governing. Mrs. Vink had established a pattern with her first two children. A few months after each of the older children was born, Mrs. Vink returned to working extensively on the farm. It is likely that she would have done the same following the birth of her third child. In her statement to Co-operators (Exhibit 1), taken on August 31, 1993, the following appears: "I usually do milking, feeding calves and most chores around the farm with the exception of field work. Because I had my daughter seven months ago, I presently spend most of my time caring for the children — sort of like being on maternity leave." This suggests that Mrs. Vink considered the time after the birth of her third child as maternity leave, with an eventual expected return to longer hours of work. I find that Mrs. Vink had intended to return to working longer hours on the farm, until the accident intervened.

Several cases have held that homemakers who had some other minimal employment inside or outside the home are not excluded from receiving section 13 benefits. In essence, these cases seem to apply a kind of de minimis test. In Beiler,³ the applicant was a self-employed Tupperware salesperson, who carried out most of her activities at home, including preparing and maintaining her business records. Arbitrator Sampliner did not see Mrs. Beiler's occasional work trips and attendance outside her home as disqualifying her from section 13 benefits.

Similarly, in Walicki,⁴ a homemaker with minimal part-time employment as a newspaper carrier could have claimed under section 13. In Menonna,⁵ a homemaker and mother of three who worked one hour a day as a school lunchroom supervisor and earned less than $100 a week was held to be entitled to section 13 benefits.

In all these cases, the work outside the home had always been minimal and, at least for those who only worked outside the home (Walicki, Menonna), the pay was small. However, in the present case, Mrs. Vink had worked extensively on the farm and was planning on returning to that work. As part of the fruits of her labour, she enjoyed a house and a car, and her expenses were paid for. I find this remuneration more than minimal. She normally worked more hours per week outside the house than did the applicants in the cases noted above.

I find that Mrs. Vink was employed or self-employed at the time of the accident.

This raises the further issue of whether Mrs. Vink falls within the exception under paragraph 13(2)2 — that is, whether she had only income from self-employment from work in her home.

Counsel for Mrs. Vink sought to apply the broadest possible meaning to the word "home." Mrs. Vink stated in chief that when she was not doing housework or looking after the children, she did yard work, such as cutting the lawn, or sweeping the barn. During cross-examination, Mrs. Vink agreed that at the time of the accident, she was involved in feeding the calves, feeding and bedding the young cattle, and cleaning the barn. To feed the young cattle, she would take 15 minutes to break apart bales of hay, and fork the hay into their feeding trough. Afterwards, she would spend half an hour cleaning the bar where the animals had been fed by sweeping the hay and waste materials from the walkway.

To equate these activities with work in the home would be to equate the barn with the home. The Compact Edition of the Oxford English Dictionary (Oxford University Press, 1971) contains the following under the extensive definition of "home":

2. A dwelling-place, house, abode; the fixed residence of a family or household; the seat of domestic life and interests; one's own house; the dwelling in which one habitually lives, or which one regards as one's proper abode. Sometimes including the members of a family collectively; the home-circle or household.

I find that the activities Mrs. Vink carried out when working on the farm went beyond what could reasonably be called work in the home. On that basis, Mrs. Vink does not fit within the section 13 primary caregiver exception. I must now determine the quantum of the weekly income benefit, and decide whether any deductions should be made for post-accident income.

Quantum of Income Benefit and Deduction of Post-Accident Income

To calculate the benefit under section 12, one must first determine an individual's gross weekly income. As Mrs. Vink received no salary from CHI, her income must be imputed, either from the income of CHI, or the "money's worth" Mrs. Vink received.

Income imputed from CHI's income

Co-operators submitted that part of the income of CHI could be imputed to Mrs. Vink. Todd van Rees, the accountant hired by Co-operators, treated 49% of CHI's income as Mrs. Vink's income from self-employment. He attributed income to her as an owner/manager, regardless of whether the income was in the form of a dividend, salary, repayment of debt, or increase in retained earnings. He based his calculations on the assumption that Mrs. Vink did approximately 50% of the work before and after the accident.

This assumption is erroneous, because I am satisfied that Mrs. Vink did considerably less than 49% of the work on the family farm before the accident, and did none of the work after the accident.

Mr. van Rees admitted that, if Mrs. Vink did no work at all after the accident, and had no involvement in running the business, her earnings from the family farm would be considered pure investment income. Mr. van Rees further admitted that he had not determined the benefit payable to Mrs. Vink in a situation where she worked only two hours a day on the farm before the accident, and did not work at all afterwards.

As the benefit payable on the basis of the farm's income was not calculated, I find it impossible to ascribe any particular value to Mrs. Vink's role in running the farm, before or after the accident.

Arbitrator Mackintosh faced a similar situation in Piper,⁶ where she also found that the assumptions made by the insurer's accountant were incorrect. Accordingly, she found it very difficult to fairly apportion the income, expenses and ceasing expenses to the applicant, and therefore could not reach an accurate assessment of the weekly income benefit payable on that basis. She concluded that the corporate structure and longstanding salary arrangements more fairly reflected the financial circumstances of the applicant, and refused to pierce the corporate veil.

I find her reasoning persuasive in this case. Accordingly, I am not prepared to impute a portion of CHI's income to Mrs. Vink on the evidence before me.

Income imputed from "money's worth"

Co-operators also submitted that Mrs. Vink received income from the "money's worth" of benefits she received from CHI. Counsel for Mrs. Vink relied on the decision in Bress⁷ to suggest that "income in kind" or "money's worth" cannot be validly used as the basis for a weekly benefit. However, Senior Arbitrator Naylor wrote at page 15 in Bress:

The scheme and purpose of the legislation support a broad definition of the term "income" so as to capture the real return from employment or self-employment generated to an applicant in these periods [the four or 52-week periods preceding an accident]. Money accrued but not received could be included. Moreover, it might reasonably extend beyond money to money's worth — to remuneration or return capable of being estimated in monetary terms. [Emphasis added.]

Arbitrator Makepeace applied this statement from Bress in Zehr.⁸ She found that the applicant had received income as "money's worth" before the accident, in that his father had paid his rent and gave him beef and milk from the Zehr farm. In the present case, Mrs. Vink had the use of the house and car and the payments for expenses, including part of the $1,500 monthly household expense payment from CHI.

The Vinks also received "money's worth" in the way they arranged CHI's finances. In his testimony, Mr. Vink agreed that he and his wife decided how to arrange their affairs. On his accountant's advice, they took no salary, in order to avoid paying taxes. Instead, they repaid their debts and purchased new land and equipment. He agreed on cross-examination that, by reducing their debts and obtaining more property, he and his wife were getting their "money's worth."

I find that Mrs. Vink's pre-accident income must be determined on the basis of the income she received in the form of "money's worth." Since I heard no evidence establishing that value, I ascribe the minimum value for gross weekly income pursuant to subparagraph 12(7)1 .iii of the Schedule, of $232.

Since I heard no evidence establishing post-accident income on a "money's worth" basis, and in fact I have found that Mrs. Vink was not working after the accident, I make no deduction under section 15.

Therefore, pursuant to subsection 12(4) of the Schedule, I find that Mrs. Vink's weekly income benefit is 80% of $232, or $185.60.

Expenses

I exercise my discretion to award her the expenses of this application.

I find that she is entitled to interest on the weekly income benefits, as set out in section 24 of the Schedule.

Order:

1. Mrs. Vink is entitled to weekly income benefits under section 12 of the Schedule.

2. The correct amount of her weekly income benefit is $185.60.

3. Co-operators is not entitled to deduct any amounts from the weekly income benefit.

4. Mrs. Vink is entitled to her expenses incurred in respect of the arbitration and interest on the weekly income benefits.

July 6, 1995

David Evans Arbitrator

Date

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. 2Rajinder Sharma and Cooperators General Insurance Company, February 7, 1994, OIC File No. A-003840 (under appeal).
3. 3Lucy Beiler and Alpina Insurance Company Limited, February 22, 1994, OIC File No. A-003051
4. 4Theresa Walicki and Security National Insurance Company, January 27, 1993, OIC File No. A-001403
5. 5Margherita Menonna and Allstate Insurance Company of Canada, August 30, 1994, OIC File No. A-003005
6. 6Thomas George Piper and Zurich Insurance Company, December 6, 1993, OIC File No. A-002585 (under appeal)
7. 7David Bress and Erica Bress and State Farm Insurance Companies, March 23, 1992, OIC File No. A-000191 and A-000192
8. 8Kevin Zehr and The Guarantee Company of North America, July 30, 1993, OIC File No. A-001963