Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 177

Appeal P-000881

OFFICE OF THE DIRECTOR OF ARBITRATIONS

MICHAEL MCNAMARA

Appellant

and

ZURICH INSURANCE COMPANY

Respondent

Before:

Elisabeth Sachs

Counsel:

Altor Shields (for Michael McNamara)

Brian C. Atherton (for Zurich Insurance)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order dated April 26, 1994 is confirmed.

2. Mr. McNamara is not entitled to his appeal expenses.

October 22, 1996

Elisabeth Sachs Director of Arbitrations

Date

REASONS FOR DECISION

I. BACKGROUND

Michael McNamara was injured in a motor vehicle accident on November 25, 1990. He received weekly income benefits from Zurich Insurance Company ("Zurich") until May 1991, under O.Reg. 672, the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the Schedule), when they were terminated.

Mr. McNamara claimed he should receive benefits until December 31, 1991 and also disputed the amount paid, asserting he was entitled to an income benefit of $1,050 weekly. A hearing was held over three days in July and September 1993. Six witnesses, including two accountants, testified but no medical witness was called. Of the twenty-three exhibits filed, six were videotapes. Although the arbitration proceedings were recorded, no transcript was made available for the appeal.

On Mr. McNamara's continued eligibility for weekly benefits, the arbitrator held "the surveillance videotapes show that by March 11, 1991, Mr. McNamara was not substantially unable to perform his essential tasks as a martial arts teacher." (Decision, p.11). She found the surveillance evidence gathered in March and April 1991 consistent with the reports of Dr. Reuven Lexier who examined Mr. McNamara, at Zurich's request, on March 13, 1991 and August 12, 1991. Mr. McNamara's physician, Dr. Michael Weinstock, examined him three times (December 5 and 11, 1990, and July 26, 1991) and found some ongoing pain but no restriction of movement by the summer of 1991.

As to the amount of weekly benefit claimed, the arbitrator found the evidence contradictory and the figures presented by Mr. McNamara, unreliable. She held Mr. McNamara did not "put forward a coherent account of [his] financial affairs, supported by evidence of sufficient quantity and quality." (Decision, p.19). Accordingly, she determined the minimum weekly income benefit of $185.60 under the Schedule was payable, and ordered Mr. McNamara to repay Zurich the full amount it had paid above the minimum.

II. ISSUES AND ANALYSIS

A. Eligibility for Weekly Income Benefits

Mr. McNamara submits the arbitrator erred in law and misinterpreted the test of "substantial inability to perform essential tasks" set out in subsection 12(1) of the Schedule. He states that the test contemplates looking at the totality of a person's essential tasks before the accident, and contrasting that to the situation after the accident. If a person has only a "limited" ability to resume all of his or her activities, this means he or she still has a substantial inability to do their essential tasks.¹

Mr. McNamara contends the arbitrator made no findings whether all the activities he testified about constituted his complete or total job activities as a kickboxing/kung-fu instructor. He admitted that while he resumed teaching after the accident, it was not until December 1991 that he was anywhere close to his peak athletic form. He also maintained that while strenuous activity is shown in one post-accident videotape of him teaching a kung-fu class, this does not mean he can teach two classes, back to back, (as was his practice before the accident) or can give private lessons with appropriate demonstration and performance as before.

At page 6 of the decision, the arbitrator sets out Mr. McNamara's evidence about his essential tasks, which was provided by oral testimony and the filing of four videotapes (Exhibits 4 to 7). It appears Mr. McNamara taught 15 group lessons and 10 hours of private lessons each week before the accident. He also spent time in the administration of the "Twin Dragon Kung Fu & Kick Boxing Club" and in promoting movie ventures and the sport of kickboxing.

The arbitrator outlined the evidence about Mr. McNamara's ability to teach classes after the accident at page 8. This was contrasted with the investigator's evidence and the videotapes of Mr. McNamara's activities in March and April 1991. The arbitrator concluded the surveillance evidence showed Mr. McNamara could perform his essential tasks as a martial arts teacher by March 11, 1991. She confirmed the conclusion she reached on this evidence with the medical reports of Drs. Lexier and Weinstock.

The arbitrator compared Mr. McNamara's demonstrated abilities in March 1991 with his testimony and that of Mark Radman, who began as a student at the club in December 1990. The arbitrator accepted that although Mr. McNamara was usually present for the beginners' class that winter, it was taught by someone else. It appears the arbitrator concluded the accident had no effect on Mr. McNamara's administrative and promotional activities.

Although the tasks the arbitrator found "essential" are not set out in point form, it is clear from the decision that she adopted Mr. McNamara's description of his pre-accident activities for the most part. She did not, however, accept his version of when he was able to substantially resume them. There appeared to be scant evidence as to the precise level of teaching activity Mr. McNamara undertook at any specific point after February, 1991. Without the transcript, only the arbitrator's summary of the evidence (which was not seriously challenged) is in the record.

In assessing the arbitrator's understanding of just what Mr. McNamara was capable of doing by early March 1991, it is clear she took the videotape evidence (supplied by both parties) and coupled it with the medical reports. Her decision focused on the most contentious of the issues - when Mr. McNamara was able to substantially resume his teaching activities. In my view, the arbitrator did not misinterpret the test of "substantial inability to perform essential tasks."

As stated in previous appeal decisions, particularly in the absence of a transcript, "where the evidence as evaluated and facts found in the arbitration are disputed, the duty of the Director is not to re-try the issues as if they were presented anew, nor is it to interfere with the arbitrator's findings in relation to that evidence unless the findings have insufficient or no evidence to support them."²

I reviewed the medical reports and the videotapes. On that material, I conclude the arbitrator was justified in making the findings she did. In addition, the arbitrator had the advantage of hearing testimony from Mr. McNamara, and others, which she summarized in the decision. I find there was sufficient evidence for the arbitrator to conclude that Mr. McNamara was substantially able to perform his essential tasks after March 11, 1991. The appeal on this issue is dismissed.

B. Amount of Weekly Income Benefit

Mr. McNamara's counsel proposed an interesting theory on this issue during oral submissions. The theory, as I understand it, is that if the arbitrator cannot believe Mr. McNamara's contradictory and unreliable evidence about his pre and post-accident income, then she should accept Zurich's view of the income possibly earned by his business. It was not clarified in the documents or testimony whether the sports club was a sole proprietorship run by Mr. McNamara, or part of another corporate entity. Mr. McNamara submits that even in the absence of personal and corporate income tax and GST returns, the arbitrator had enough information to make a decision more favourable than awarding the minimum benefit. However, this approach seems to miss the arbitrator's point about the unreliability of the financial evidence.

First, as the principal source of the club's income was membership fees, the arbitrator determined revenue should have been shown on an accrual, rather than a cash basis. No figures or documents were presented that when considered, could have allowed this calculation. Secondly and as she emphasized, more importantly, the arbitrator found she could not rely on any of the financial statements tendered by Mr. McNamara.

The arbitrator found that the discrepancies among the "internal use only" statements and those produced later by Mr. McNamara's accountant were not explained by him or the accountant. She also noted significant differences between the club membership revenue figures in its operating statements and general ledger compared with its bank deposits. The arbitrator could not accept the proposition that the bank deposits bore no relation to business activity, as Mr. McNamara's accountant stated in his report of July 28, 1993, when Mr. McNamara had taken the position the bank account was for operating expenses. Finally, the arbitrator felt she was not getting "the whole picture" because membership contracts of the club referred to a numbered company, whose relationship to the club and whose books and records were never presented or explained.

Mr. McNamara admitted that club revenue was used to finance movie productions, but could not provide any details. The arbitrator was further troubled by the lack of detail about the financial relationship between this club and a similar one operated by Mr. McNamara's brother.

The arbitrator did not demand accounting perfection by this small business. However, she did expect "a coherent account of [its] financial affairs, supported by evidence of sufficient quantity and quality." She found the evidence unreliable. It would not have been reasonable for her to look to Zurich's reinterpretation of the figures to determine Mr. McNamara's income and expenses: he simply did not meet the onus of proof. The evidence was not credible or worthy of belief; it was also incomplete. In any event, Zurich's accountants, in their report of July 20, 1993 (Exhibit 21) concluded, after obtaining the inconsistent statements noted above, "it is impossible for us to determine what Mr. McNamara's pre-accident income was or what diminution resulted in the post accident period...".

In order to interfere with the arbitrator's findings, there must be insufficient evidence to support the conclusions she came to. I find ample evidence here to support the arbitrator's approach. Mr. McNamara also submits that either I should make the appropriate calculations or send the matter back for a re-hearing before another arbitrator, as the arbitrator had a positive duty to make a specific finding as to quantum. I find this to be completely untenable where the accounting evidence has been found lacking in sufficiency and credibility, and would have necessitated the making of unproven assumptions. The appeal on this aspect of the decision fails.

III. EXPENSES

This appeal was based primarily on Mr. McNamara's view the arbitrator was wrong in coming to the conclusions she did on the facts, although the submissions attempted to justify it as an error in law. Although ill-considered, I do not believe it was brought frivolously given the repayment ordered. Mr. McNamara is not entitled to his appeal expenses.

October 22, 1996

Elisabeth Sachs Director of Arbitrations

Date

Footnotes

1. 1This is similar to the argument advanced in Whitney and The Co-operators, (March 31, 1993, OIC A-001005) aff'd on appeal (July 10, 1996, OIC P-001005). The test is not whether all of the tasks deemed to be essential can be carried out to a certain standard. The Schedule allows for "gradations in ability to perform essential tasks, requiring that the disability, whatever the degree, be substantial" (Appeal decision, p.4).
2. 2Whitney, supra at p. 5. As to the lack of a transcript and the burden of the parties challenging findings in that circumstance, see Singh and Simcoe Erie Group, (February 2, 1994, OIC P-000532) at p. 9.