Neutral Citation: 1996 ONICDRG 112
OIC A-006818
ONTARIO INSURANCE COMMISSION
BETWEEN:
HENRI KUNTZ
Applicant
and
ROYAL INSURANCE COMPANY OF CANADA
Insurer
DECISION
Issues:
The Applicant, Henri Kuntz, claims he was injured in a motor vehicle accident on January 4, 1993. He applied for and received statutory accident benefits from the Royal Insurance Company of Canada ("Royal") payable under Ontario Regulation 672.1 Royal terminated weekly income benefits on June 28, 1993. Royal seeks repayment of all benefits paid.
The issues in this hearing are:
Is Mr. Kuntz entitled to further weekly income benefits in respect of the accident of January 4, 1993?
If Mr. Kuntz is entitled to ongoing weekly income benefits, what is the amount of such benefits?
Is Royal entitled to the repayment of the benefits paid to Mr. Kuntz?
Mr. Kuntz also claims interest on any amounts owing, and his expenses incurred in the hearing.
Royal claims an award in the amount of its assessment, under section 282 (11.2) of the Insurance Act R.S.O. 1990, c.1.8, as amended on the basis that Mr. Kuntz's conduct in this proceeding was frivolous, vexatious, and constituted an abuse of process.
Result:
Mr. Kuntz is not entitled to any weekly income benefits with respect to the motor vehicle accident of January 4, 1993.
Mr. Kuntz is required to repay all weekly income benefits he received.
Mr. Kuntz is also required to pay Royal the amount of its assessment, under section 282(11.2) of the Act.
Hearing:
The hearing was held in North York, Ontario, on August 29 and September 12, 1995, before me, Frederika Rotter, Senior Arbitrator.
Present at the Hearing:
Applicant:
Henri Kuntz
Insurer's
Representative:
Robert Franklin
Barrister and Solicitor
The parties were assisted by Mr. Philippe Vitu, a French language interpreter.
Witnesses:
Isabelle Kuntz, Applicant's Spouse
Exhibits:
Exhibit 1
Report from Kampherm Claim Services dated November 8, 1993
Exhibit 2
Insurer's Arbitration Brief
Reasons for Decision:
Preliminary and Procedural Issues:
At the commencement of the hearing, Mr. Kuntz disputed whether the issue of repayment of benefits was properly before me. He claimed he was not prepared to deal with this issue since it had not been included as an issue in dispute in the reporting letter of the prehearing arbitrator, dated November 21, 1994. He requested an adjournment on that basis.
I did not grant the adjournment. Although the first reporting letter of the prehearing arbitrator did not mention the issue of repayment, the record shows that the prehearing arbitrator issued a further letter dated December 21, 1994, in which she specifically acknowledges that she had neglected to include this issue. The prehearing arbitrator had made a note of this claim. She indicated that her letter listing the issues should be amended to add the issue of the repayment of benefits. I also note that the response filed by the Insurer clearly claims repayment of benefits paid. In the circumstances, I am satisfied that Mr. Kuntz was well aware that the issue of repayment was to be dealt with in the arbitration hearing.
I also note that this hearing had been previously rescheduled on three separate occasions, to accommodate Mr. Kuntz. A letter to Mr. Kuntz from the Registrar's office, dated July 12, 1995, granting the third adjournment, indicated that no further adjournment requests would be entertained and that the next hearing date was peremptory to Mr. Kuntz.
Mr. Kuntz then questioned whether the issue of quantum could or should be dealt with at the hearing. He indicated that he did not have sufficient documentation available to substantiate his income claims, and advised that he wished a ruling on ongoing entitlement only. Mr. Kuntz did not explain why he was not prepared to proceed with the quantum portion of his claim. I indicated that a favourable ruling for Mr. Kuntz with respect to entitlement only would not be of assistance to him. I would have no authority to order Royal to pay any specific amount, in the absence of agreement or a ruling on quantum. I ruled that the hearing would not be severed in order to separately deal with the various issues in dispute. Ultimately, Mr. Kuntz agreed that all the issues in dispute would be dealt with in the course of the hearing.
After a short recess, Mr. Kuntz then moved to have me disqualify myself on the basis that my French language skills were not adequate for the purposes of conducting a hearing in French. I ruled that I would not so disqualify myself. I experienced no difficulty communicating with or understanding Mr. Kuntz in French. Further, a French-English interpreter was present at the hearing at all times, for the assistance of all the parties, as the Insurer's representative was non-Francophone. In the circumstances, I consider that Mr. Kuntz's request that I disqualify myself was neither justified nor bona fide, and was motivated by his manifest interest in obstructing and postponing the hearing process. I am strengthened in this conclusion by the fact that Mr. Kuntz, at one point in these proceedings, had waived his request for a French language hearing. (At that time, he had English speaking counsel, with whom he apparently communicated without difficulty).
Mr. Kuntz is, of course, entitled to a full and fair hearing in the official language of his choice. In my view, Mr. Kuntz's rights in this regard have been respected and have not been compromised.
My conclusions about this particular issue are strengthened in light of my general view of Mr. Kuntz's credibility and the merits of the substantive claims he has put forward, dealt with below.
Substantive issues:
(a) Disability claim
Mr. Kuntz claims he was involved in a motor vehicle accident January 4, 1993. He claims he was rear-ended while stopped at the intersection of Bayview and Steeles, in Toronto, and that as a result of this accident he was disabled from working until September 1, 1993.
Mr. Kuntz received weekly income benefits from Royal, in the amount of $185.60 per week, for 24 weeks, from January 11 to June 28, 1993. He claims to be entitled to ongoing weekly income benefits in the amount of $600 per week, until August 31, 1993.
At the hearing, Mr. Kuntz provided no evidence about his essential tasks prior to the accident. He claims he was self-employed as an antique dealer, but gave no information about the tasks he performed, or the nature of his business. He did not testify about his disability resulting from the motor vehicle accident other than to say he was "sick", sent to physiotherapy, and unable to work.
The medical documentation filed by Royal shows that in the four year period prior to the motor vehicle accident of January 4, 1993, Mr. Kuntz was allegedly involved in a number of previous accidents, from February 20, 1989 through to November 19, 1992. He apparently claimed some insurance benefits (for the most part, creditor disability benefits) in relation to all these accidents.
In his testimony, Mr. Kuntz stated categorically that he was involved in at most four accidents prior to the motor vehicle accident of January 1993. However, my review of the evidence discloses reports of at least six accidents.
A form filled out April 11, 1989 indicates that Mr. Kuntz was suffering from a myofascial syndrome resulting from a motor vehicle accident on February 20, 1989, and was expected to be off work until June 1, 1989.2
Another form dated January 12, 1990 reports neck and shoulder pain from a second accident on October 15, 1989, and indicates that as of January 1990 Mr. Kuntz had not yet returned to work. The report signed by Mr. Kuntz's physician indicates he was expected to return to work on February 1, 1990.3
A report dated November 21, 1991 refers to a third motor vehicle accident on October 6, 1991, and resulting complaints of pain, tenderness and cervical strain.4 A creditor disability claim form completed on March 4, 1992 indicates that Mr. Kuntz had not returned to work subsequent to that accident and was continuously disabled.5 A doctor's report dated February 13, 1992 refers to "ongoing symptamology" and indicates that in the doctor's opinion, Mr. Kuntz "cannot do any physical work."6
A subsequent creditor disability form dated April 16, 1992 refers to a fourth motor vehicle accident on March 8, 1992 and a "whiplash" injury.7 That form indicates that Mr. Kuntz had not worked since March 8, 1992. The attending physician's report refers to a "similar injury" in October 1991.
A claim form dated July 23, 1992 refers to "multiple motor vehicle accidents", i.e. October 6, 1991, March 8, 1992 and June 16, 1992 (fifth accident) and indicates that Mr. Kuntz has been continuously disabled since October 1991, and "cannot do any of the physical aspects of his work."8 A subsequent form dated September 2, 1992 confirms that Mr. Kuntz has been continuously off work through to August 18, 1992, as a result of the three last motor vehicle accidents.9
A claim form dated February 17, 1993 refers to a sixth motor vehicle accident on November 19, 1992, with a "whiplash injury".10 I note that this form fails to refer to the accident of January 4, 1993, which is the subject of Mr. Kuntz's present claim.
In cross-examination Mr. Kuntz agreed that he was disabled as a result of his accidents prior to January 4, 1993, "but not completely disabled." He stated that he had to work "a little bit", although he also claimed that he was incapable of working due to mental disorders and stress.
Mr. Kuntz failed to provide any credible evidence to show that he was in fact injured in the accident of January 4, 1993, or that his injuries prevented him from performing any essential tasks of his employment that he was previously doing. I also note that Royal introduced evidence of a letter from another insurer, Allstate, indicating that Mr. Kuntz was also claiming accident benefits from Allstate Insurance Company of Canada for an accident which allegedly took place on the same date, January 4, 1993.11 Mr. Kuntz had apparently told Allstate that he was injured in an accident on that day, while a passenger in a different motor vehicle.
Mr. Kuntz provided no medical evidence to support his claim for benefits, and his own testimony was so minimal, evasive and contradictory as to be totally unreliable. Accordingly, I conclude that Mr. Kuntz has failed to establish that he suffered any injury which caused him to be substantially disabled from performing the essential tasks of his employment as the result of an accident on January 4, 1993. Therefore, he is not entitled to any weekly income benefits in respect of this accident.
(b) Quantum of benefits
Because of my findings with respect to Mr. Kuntz's alleged disability, the issue of quantum is moot. However, for purposes of completeness, and to shed further light on Mr. Kuntz's reliability as a witness, I shall deal with this issue.
In his original application for accident benefits Mr. Kuntz indicated that in the 52 weeks prior to the accident he had earned a gross income of $47,000. At the hearing he testified that in 1992, the year prior to the accident he was earning in excess of $82,000 from his business, and was therefore entitled to weekly income benefits in the maximum amount of $600 per week.
Mr. Kuntz admitted that he had no records to prove his earnings, but stated that the "proof" was that he was paying $1,500 per month in rent for his apartment, which he could not have done without substantial earnings. He could not explain how he had earned this income in 1992, a year when he had allegedly been involved in three motor vehicle accidents and was making disability claims on the basis that he was continuously disabled for the better part of that year.
Mr. Kuntz tendered no documentation to support his alleged earnings in 1992. A copy of his tax return for that year was tendered in evidence by Royal.12 Mr. Kuntz in his testimony referred to a report prepared for Royal by H.F. Kampherm Claims Services, which states that Mr. Kuntz "declares that he was earning at $82,000 per year operating his own business."13 The adjuster, Mr. Kamphern, had reviewed Mr. Kuntz's tax return and noted that although for income tax purposes Mr. Kuntz reported an income of approximately $17,000 in 1992, his business was apparently earning income greatly in excess of that amount.
Mr. Kuntz then referred to a report by Williams & Partners Inc., also prepared for Royal, dated September 1, 1993.14 Williams & Partners were requested by Royal to determine Mr. Kuntz's income for insurance purposes. Their report indicates that they "encountered great difficulties obtaining information from Mr. Kuntz." They were able to review Mr. Kuntz's 1992 tax return, filed in July 1993, in which Mr. Kuntz reports business income of $82,000. However, Mr. Kuntz provided no further information to Williams & Partners. He had no books and records from his business, had no bank statements, indicated that all his business transactions were in cash, and that no documentation existed. He indicated that he had informed his accountant that he had grossed $82,000 in 1992, without explaining how he had arrived at this amount.
In cross-examination, Mr. Kuntz stated that he could not supply documentation concerning his income because his car with all the business documentation had been stolen. He testified he had no record of bank transactions because 99% of his business was in cash. He explained that a although in his statement of income and expenses from his business (filed with his tax return), he claimed $474 in interest and bank charges, these charges related to "private" accounts.
Mr. Kuntz's evidence with respect to his earnings is wholly unsatisfactory. He has failed to show that he is entitled to any benefits over the minimum amount. Indeed, the totality of the evidence is such that I question whether Mr. Kuntz would have been entitled to any benefits at all under section 12 of the Schedule, since it is not clear to me that during the relevant period prior to the motor vehicle accident he was gainfully employed or self-employed pursuant to section 12.
(c) Royal's Claim for Repayment of Benefits
Royal relies on section 17(3) (a) of the Schedule, which provides:
17.-(3) The insurer is not required to pay benefits under subsection 12(1) or 13 (1).
(a) in respect of any person who has made, or who knows of, a material misrepresentation which induced the insurer to enter into the contract of automobile insurance or who intentionally failed to notify the insurer of the change in the risk material to the contract
Royal claims it was not obliged to pay benefits under subsection 12(1) since it was induced to enter into the contract of insurance as a result of material misrepresentations made at the time that the insurance was applied for.
Mr. Kuntz claims that in the accident of January 4, 1993 he was driving a black Jeep Cherokee vehicle which belonged to his wife. However, according to Ministry of Transportation records, introduced into evidence by Royal, the Jeep was registered in his name. Mr. Kuntz testified that although the car was registered to him, it in fact belonged to his then common-law wife, Isabelle Nguyen, to whom he had given the vehicle as a gift. He testified that she regularly drove it, and he drove it very rarely.
Mr. Kuntz acknowledged that although he was the registered owner of the vehicle, it was insured under the name of Ms. Nguyen. Mr. Kuntz stated that Ms. Nguyen had "told the truth" when she indicated to Royal that the vehicle was hers. He stated that the fact that the car was not registered in Ms. Nguyen's name was "her problem."
Royal filed in evidence a copy of Ms. Nguyen's application for automobile insurance, dated February 21, 1992.15 The application refers to a 1988 Chrysler Le Baron. In her application Ms. Nguyen (now Mrs. Kuntz) indicates she is single and has no claims or conviction history. She also indicates, at question 4a, that to her knowledge, no one in her household has a driver's licence or permit which was suspended in the last six years. At question 4b she indicates that no one else in the household or business is licenced to drive. A note from Royal's files dated September 21, 199216 indicates that all coverages on the Chrysler leBaron are to be cancelled on that vehicle (as it is "a write-off") and are to be extended to the 1989 Jeep Cherokee, effective September 30, 1992.
The evidence filed by Royal17, which was not disputed by Mr. Kuntz, indicates that Mr. Kuntz was convicted of speeding in January 1992, and had his license suspended on February 15, 1992 (reinstated on March 25, 1992). He was convicted for another moving violation in July 1992 and for failure to surrender his permit in September 1992.
Mr. Kuntz attempted to explain his wife's answers on her application for insurance to Royal by stating that the document should have been in French, as Ms. Nguyen's English was poor. He also indicated that his wife did not know that his licence had ever been suspended. He attempted to explain her response to question 4b by suggesting that he and his wife were perhaps not living together at the time.
Mrs. Kuntz confirmed in her testimony that her husband had given the car to her as a gift, but that she had not advised Royal that he was the registered owner. She stated she did not have any recollection of having filled out the application for insurance. She also explained the incorrect information on the application by stating that her English was very poor, and that she had not verified all the answers. She admitted that she knew Mr. Kuntz was licensed to drive, but stated that she did not know of any suspension. She admitted that her response to question 4b was wrong, and indicated that she and her husband were living together but not married at that time.
Royal argues that the misrepresentation regarding the ownership of the car, and with respect to Mr. Kuntz's driving history are material misrepresentations, under subsection 17(3)(a). Royal submits that it would have required a much higher premium of insurance had it known that Mr. Kuntz, and not Ms. Nguyen (as she then was) was the registered owner of the vehicle. Royal argued therefore that it was not obliged to pay section 12 weekly benefits to Mr Kuntz, pursuant to subsection 17(3), since he is a person who knows of a material misrepresentation which induced the insurer to enter into the contract of automobile insurance. Further, Royal submits that Mr. Kuntz is obliged to repay all section 12 benefits he received, pursuant to subsection 27(2) of the Schedule, which provides:
27.-(2) A person must repay to the insurer any benefit received under sections 12 and 13 that is paid to him or her if the person or the persons in respect of whom the payment was made was disqualified from payment under section 17.
I accept this submission. In this regard, I adopt the reasoning of arbitrator Makepeace, who found in Le and the Dominion of Canada General Insurance Company18 that information which substantially affects the premium is material to the contract. Accordingly, Mr. Kuntz is precluded from receiving weekly income benefits pursuant to subsection 17(3)(a) of the Schedule. By virtue of subsection 27(2) of the Schedule, he is obliged to repay all such benefits which he received. It is not disputed that Mr. Kuntz received a total of $4,454.40 in weekly income benefits. He must therefore repay this amount to Royal.
Royal also argued that Ms. Nguyen had no insurable interest in the 1989 Jeep Cherokee and therefore the insurance policy was void ab initio. It stated that there was never a valid insurance policy because the named insured did not have an insurable interest in the vehicle when she insured it. Accordingly, it argued that all benefits paid under the policy (including medical benefits amounting to $4,370.00) should be repaid.
Royal cited no caselaw in support of its position that the policy was void ab initio. In my view, Royal's argument is answered by section 233(2) of the Insurance Act, R.S.O. 1990, c.I.8, as amended which provides:
(1) Where,
(a) an applicant for a contract,
(i) gives false particulars of the described automobile to be insured to the prejudice of the insurer, or
(ii) knowingly misrepresents or fails to disclose in the application any fact required to be stated therein.
(b) the insured contravenes a term of the contract or commits a fraud; or
(c) the insured wilfully makes a false statement in respect of a claim under the contract,
a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited, R.S.O. 1980, c.218, section 206(1).
(2) Subsection (1) does not invalidate such no-fault benefits as are set out in the No-Fault Benefits Schedule, c.2, section 44.
(Emphasis added)
I also rely on the appeal decision in Lambton Mutual and General Accident and Findlay19, where Appeal Officer Draper concludes, at page 10, "Misrepresentations by the named insured about his or her ownership of the vehicle may invalidate coverages that are based on ownership, but do not render the entire policy void ab initio."
In the alternative, Royal submitted that all benefits received by Mr. Kuntz should be repaid by him pursuant to subsection 27(1) of the Schedule20, since such benefits were paid to him due to his fraud. In this regard, Royal led evidence of Mr. Kuntz's record of criminal convictions in respect of 13 counts of fraud-related charges, for which he was sentenced to a total of almost seven years in jail. Although Mr. Kuntz strenuously objected to the introduction of this evidence, I found it was relevant to the question of his credibility, and therefore admissible. Royal filed the pertinent certificates of conviction, dated 1981, 1986, and 1994.
Counsel for Royal submitted that the evidence in this case shows that Mr. Kuntz suffered from ongoing disabilities due to his previous accidents, which he did not disclose to Royal. Further, counsel submitted that I do not have sufficient evidence to find that an accident even occurred on January 4, 1993, as alleged by Mr. Kuntz, in light of the conflicting information he provided to Allstate, alluded to above. Royal submitted that in light of all the evidence before me, I should conclude that all benefits were paid to Mr. Kuntz as a result of his fraud.
Mr. Kuntz testified that the police made a report concerning the accident of January 4, 1993, and that he submitted a copy of this report to Royal. He did not have a copy of the report at the hearing. However, it is not clear to me whether Royal seriously questioned if the motor vehicle accident of January 4, 1993 actually took place, at any time prior to the arbitration hearing.
Although Royal generally alleged fraud and claimed repayment of all benefits paid, it had never, prior to the hearing, specifically asserted that an accident did not take place on January 4, 1993. Accordingly, Mr. Kuntz was not prepared to deal with this particular allegation, and did not bring a copy of the Motor Vehicle Accident Report to the hearing.
I have found that Mr. Kuntz is not a reliable witness, and it is clear that all his assertions must be carefully weighed. However, I am not prepared to find that no accident took place on January 3, 1993, based only on Mr. Kuntz's general lack of credibility. Royal had every opportunity to request an accident report when Mr. Kuntz first claimed benefits. It also had the right to obtain an insurer's medical examination and could have contacted Mr. Kuntz's medical practitioners if it questioned the existence of injuries as a result of the accident, or Mr. Kuntz's need for therapy and treatment.
In the absence of clear and specific evidence of fraud, and based only on Mr. Kuntz's general lack of credibility, I am not prepared to find that medical benefits were paid by Royal as a result of Mr. Kuntz's fraud. Accordingly, I do not order the repayment of the medical benefits paid.
Expenses:
Royal has asked for order that Mr. Kuntz pay it an amount equal to its assessment of $1,000, pursuant to section 282 (11.2) of the Insurance Act, on the grounds that Mr. Kuntz's application for arbitration is frivolous, vexatious and an abuse of process.
After reviewing the history of this proceeding, the documents filed, and the evidence brought before me, I have no hesitation in concluding that Mr. Kuntz's behaviour throughout has constituted a gross abuse of the arbitration process, and that his application for arbitration was both frivolous and vexatious. Mr. Kuntz presented no independent evidence whatsoever to substantiate his claims for further benefits. He has used the arbitration process to advance claims that are baseless and without merit. I have found that the contract of insurance on his vehicle was obtained through material misrepresentation. Throughout the course of his dealings with Royal he has deliberately misled the company, and has failed to disclose relevant information, in a contractual relationship demanding utmost good faith from both parties.
In my view, his numerous adjournment requests and procedural objections also amount to an abuse of the arbitration process. I order that he pay Royal $1,000.00 pursuant to the provisions of section 282(11.2). In the circumstances, Mr. Kuntz is not entitled to his expenses of the arbitration proceeding.
Order:
Mr. Kuntz shall repay to Royal all weekly income benefits he has received, totalling $4,454.40.
Mr. Kuntz shall pay Royal $1,000.00 pursuant to subsection 282 (11.2) of the Insurance Act.
June 28, 1996
Frederika Rotter Senior Arbitrator
Date
Footnotes
- Prior 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.
- Exhibit 2-21, report of Dr. Kleinman
- Exhibit 2-23
- Exhibit 2-26,
- Exhibit 2-30
- Exhibit 2-29
- Exhibit 2-35
- Exhibit 2-37
- Exhibit 2-38
- Exhibit 2-39
- Exhibit 2-20
- Exhibit 2-47
- Exhibit 1, page 2
- Exhibit 2-46
- Exhibit 2-15
- Exhibit 2-16
- Exhibit 2-19, Ontario Ministry of Transportation Statement of Driving Record
- OIC A-005561, December 20, 1994
- OIC P-005358 & P-005359, December 22, 1995.
- 27.-(1) A person must repay the insurer any benefit received under this Schedule that is paid to the person through error or fraud.