Ontario Insurance Commission
Commission des assurances de l’Ontario
Neutral Citation: 1996 ONICDRG 169
Appeal P-005599
OFFICE OF THE DIRECTOR OF ARBITRATIONS
CANADIAN GENERAL INSURANCE COMPANY
Appellant/Respondent
and
FRANCIS MILLS
Respondent/Appellant
Before:
David R. Draper
Counsel:
Gregory P. Heckel (for Canadian General)
Shawn J. O'Connor (for Francis Mills)
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Paragraph 1 of the arbitration order, dated July 6, 1995, is varied as follows:
Mr. Mills is entitled to weekly income benefits of $185.60, less 80% of his post-accident income.
No appeal expenses are payable.
October 8, 1996
David R. Draper Director's Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEALS
Francis Mills was injured in an automobile accident on August 21, 1990. He received weekly income benefits from Canadian General Insurance Company ("Canadian General") until August 21, 1993, when they were cancelled on the basis that he did not meet the stricter post-156 week test in section 12(5)(b) of Ontario Regulation 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 ("the Schedule”). Mr. Mills did not accept this decision, claiming he was entitled to ongoing weekly income benefits.
The parties also disagreed about the correct amount of Mr. Mills' weekly income benefits. Canadian General took the position that he was only entitled to the minimum of $185.60 per week, while Mr. Mills claimed the maximum - $600 per week.
In a decision dated July 6, 1995, the arbitrator concluded that Mr. Mills was entitled to a further period of weekly income benefits, and that the proper amount of his benefits was $426.24 per week, less 80 per cent of his post-accident income. She also ordered Canadian General to pay Mr. Mills' arbitration expenses related to the entitlement issue, but not quantum issue.
Canadian General appealed the part of the arbitrator's order dealing with the amount of Mr. Mills' benefits. It submits that the arbitrator erred in concluding that Mr. Mills was entitled to any more than the minimum of $185.60 per week. Mr. Mills responded to Canadian General's appeal, but filed his own appeal, claiming that he is entitled to the maximum of $600 per week for a longer period, plus his full arbitration expenses.
II. QUANTUM
A. Background
At the time of his accident, Mr. Mills was a self-employed contractor. He set up his own renovation company, AA#1 Construction, in 1988, and incorporated it in March 1989. Despite the incorporation, the parties agreed that Mr. Mills should be treated as self-employed rather than as an employee of the corporation. AA#1 Construction did residential renovations and additions. Sometime in 1990, Mr. Mills purchased a patio franchise. This meant that a substantial portion of his business shifted to installing patio enclosures.
Weekly income benefits are based on the applicant's gross weekly income in the four or 52 weeks preceding the accident, whichever is greater. Determining the proper amount of Mr. Mills' benefits was complicated by his inadequate business records. According to the arbitrator, he did not file personal or corporate income tax returns for the years 1988 to 1990, and had "no proper accounting records" (p.7).
Three accounting firms, two retained by Canadian General and one retained by Mr. Mills, analysed the available information. As the arbitrator put it, they tried "to make something of this incomplete financial picture" (p.8). The accountants adopted different approaches and reached different conclusions about Mr. Mills' pre-accident income.
Canadian General argued, as it does in its appeal, that Mr. Mills failed to prove his pre-accident income on any reliable basis and, therefore, should only be entitled to the minimum weekly income benefits of $185.60, less 80 per cent of his post-accident income. The arbitrator agreed that Mr. Mills did not adequately establish his income in the four weeks preceding the accident. In particular, she was concerned about the lack of reliable information about the company's expenses during that period.
Despite her concerns about Mr. Mills' credibility and the inadequacy of his records, the arbitrator felt that it would be unfair to limit him to $185.60 per week. She states in her decision that she was convinced by the evidence that Mr. Mills earned more than the minimum, and that the company was profitable in the five months before the accident. The question was, how profitable? Although the arbitrator seems to acknowledge that the accounting reports are all compromised by Mr. Mills' inadequate records, she concluded that the approach taken by BDO Dunwoody Ward Mallette ("Dunwoody"), the accounting firm retained by Mr. Mills' lawyers, "probably provides the fairest and most reliable assessment of Mr. Mills' earnings in the 52 weeks before the accident" (p.13). She adopted the figures from this report, resulting in weekly income benefits of $426.24, less 80 per cent of Mr. Mills' post-accident income.
B. The Position of the Parties
Canadian General submits that the arbitrator's conclusion is not supported by her factual findings. More specifically, it contends that she made a number of findings that should have precluded her from relying on Dunwoody's analysis of Mr. Mills' income in the 52 weeks preceding the accident.
Mr. Mills submits that the arbitrator should have relied on Dunwoody's analysis of his income in the four weeks preceding the accident, resulting in weekly income benefits of $600 per week. He argues that she erred in holding him to a stricter standard of proof, beyond a reasonable doubt, for the four-week period.
C. Analysis
The arbitrator must determine the proper amount of the insured person's weekly income benefits based on the rules set out in the Schedule. This requires a determination of his or her average gross weekly income in the four and 52 weeks preceding the accident. Where the insured person is self-employed, the analysis can be quite complicated.