Neutral Citation: 1996 ONICDRG 21

File No.: A-014959

ONTARIO INSURANCE COMMISSION

BETWEEN:

ANNE L. BOGDAN

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant's late spouse, Vincent Bogdan, was tragically killed in a motor vehicle accident on December 17, 1992. Ms. Anne L. Bogdan applied for death benefits from the Insurer, payable under Ontario Regulation 672.¹ Although the Insurer paid some death benefits, it refused to pay a dependant's benefit under section 11(2)(c) of the Schedule. The parties were unable to resolve their disputes through mediation and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is:

Is the Applicant entitled to a dependant's benefit under section 11(2)(c) of the Schedule, as a dependant of the deceased at the time of the accident?

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

Result:

1. The Applicant is not entitled to a benefit under section 11(2)(c) of the Schedule.

2. The Applicant is entitled to her expenses of the arbitration.

Hearing:

The hearing was held in Thunder Bay on November 6, 1995 before me, K. Julaine Palmer, arbitrator. After the conclusion of the oral hearing, I received further written submissions from counsel until November 30, 1995.

Present at the Hearing:

Applicant:

Anne L. (Bogdan) Robertshaw

Applicant's

Kristopher H. Knutsen

Representatives:

Barrister and Solicitor

Nancy Campbell

Law Clerk

Insurer's

William S. Zener

Representative:

Barristers and Solicitors

Witnesses:

Anne L. Robertshaw

The parties filed three exhibits at the hearing, including a document brief. The cases referred to by the parties are set out at "Schedule A" to this decision.

Evidence and Findings:

The Applicant's husband and their 2½ year old son were tragically killed in a motor vehicle accident on December 17, 1992. At the time of the accident, the Applicant was pregnant—on April 23, 1993 her second son was born. The Applicant has received a death benefit under section 11(2)(a) of the Schedule (which relates to spouses), but the Insurer has declined to pay a further benefit under section 11(2)(c) of the Schedule (for dependants). The question to be decided in this arbitration is whether the Applicant is entitled to that benefit.

Part III of the Schedule deals with funeral expenses and death benefits. Optional, enhanced benefits were purchased by the Applicant and her spouse. Accordingly, section 11(2) applies. Section 11(2) reads as follows:

11—(2) If, as a result of an accident, an insured person dies within the benefit period set out in subsection (3), the insurer will pay with respect to the insured person, if Optional Benefit 1 has been purchased,

(a) $50,000 to his or her spouse, if the deceased is survived by a spouse who was his or her spouse at the time of the accident;

(b) $50,000 to his or her dependants, if the deceased is survived by any dependant who was a dependant at the time of the accident and is not survived by a spouse who is entitled to a benefit under this this section;

(c) $20,000 to each of his or her surviving dependants who was a dependant at the time of the accident; and

(d) if, at the time of the accident, the deceased was a dependant, $20,000,

(i) to the person upon whom the deceased was dependant or, if that person is dead, to the surviving spouse of that person if the surviving spouse was the deceased's primary caregiver, or

(ii) to the other surviving dependants of the person upon whom the deceased was dependant if that person and his or her spouse are dead.

It may be readily observed from reading section 11 of the Schedule, that section 11(2)(a) makes no reference to spousal dependency: one is entitled to a benefit under that subsection if one qualifies as a "spouse at the time of the accident." Subsections 11 (2)(b), (c), and (d) introduce the concept of financial dependency with respect to the surviving family members. Taken together, the provisions of section 11 recognize the divergent circumstances of families and provide varying benefits, according to the financial circumstances of each family.

The Applicant argues in this case that she should be considered to be a "surviving dependant who was a dependant at the time of the accident." She does not argue that her husband was dependent on her— neither is there any question of any benefit for their son, who was born four months after his father and brother died.² Further, the Insurer here does not contend that the Applicant could not qualify, in a proper case, for a benefit under both sections 11(2)(a) and 11(2)(c).³

The term "dependant" is defined in section 3(2) of the Schedule.

3.—(2) For the purpose of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support on the other person or the other person's spouse.

Arbitrator Mackintosh considered whether, in the case of the death of a spouse in an accident, the surviving spouse could qualify as a "dependant" by being principally dependent for financial support on her own self or himself. She rejected that notion, stating that "it is inherent in the plain wording of section 3(2) that in order to qualify as a dependant, a claimant must be dependent upon a person other than themselves. That dependency, by definition, cannot be established through one's own self, but requires a connection or relationship with another." I agree with this interpretation.

Accordingly, the issue in this case could be reframed by stating as follows,

Was Anne Bogdan principally dependent for financial support on Vincent Bogdan at the time of the accident?

The expression "principally dependent for financial support" has been considered in a number of arbitration decisions. In Bruce and Eleanor McDonald and State Farm Insurance, March 11, 1993, OIC File No. A-001347, (upheld on appeal) dated, September 29, 1995, OIC File No. P-001347, Arbitrator Draper considered the meaning of this phrase. He wrote:

The term "principally dependent for financial support" requires more than some dependence. It means that the person claiming benefits must establish that he or she is more financially dependent on the deceased person than on any other source.

The dependency must be fundamental and not consist solely of enhancements to a lifestyle that the person would otherwise be able to maintain herself.⁴

The phrase "at the time of the accident" has been considered in several arbitration decisions and by the courts.⁵ In the case of Vanderwal and State Farm Mutual Automobile Insurance Company,⁶ the Divisional Court held that "the words, 'at the time of the accident' are clear and unambiguous. They refer to the moment in time when the accident occurred." The Court made these comments in a case interpreting section 17(1)(d) of the Schedule, where a driver's ability to lawfully operate a motorcycle "at the time of the accident" was in issue.

The Applicant submits that a wide angle approach should be taken to any "snapshot" of the family situation "at the time of the accident". She contends that prospective or future plans of the family, which are crystallized as of the date of the accident, should be included. The Applicant submits that she and her husband had agreed that she would stop working about the time of her son's birth in 1993 and that she would take an extended maternity leave, including both a period in which payments would be received from unemployment insurance benefits and a period of leave of absence. They knew that her income would drop substantially and that the family would be chiefly dependent on the earnings of Vincent Bogdan from his employment.

On the other hand, the Insurer contends that it would be incorrect to take a prospective view of dependency. It says the only prospective consideration in section 11 lies in section 11(6), which requires that the Applicant, whether spouse or dependant, survive her husband by 30 days before any amount is payable.The Insurer submits that the cases which have widened consideration of the Applicant's circumstances beyond the day of the accident have taken a historical approach to the question of dependency and not considered the future circumstances which were likely to occur. For example, in the case of Simeonoff v. Pafco, [1992] I.L.R. 1-2920, Justice Corbett found a plaintiff principally dependent for financial support on her brother, even though the dependency had arisen within the month preceding the accident and a cheque from a disability insurer had been issued three days before the accident, although she had not yet received it. In an arbitration case, Daniel Cattrysse and Westminster Mutual Fire Insurance and Anglo Canada General Insurance Company, June 21, 1993, OIC File Nos. A-001618 and A-001789, (under appeal), I found that an applicant who had earned wages on his parents' tobacco farm but had not yet received them because the crop had not been sold at the time of the accident, was dependent on his parents.

In addition, the Insurer submits that using a future perspective could disentitle claimants who now receive benefits. Prospective employees entitled to start work within one year, who have received a legitimate offer of employment made before the accident and evidenced in writing, might see their benefits terminated if the business closes before they could start working. Similarly, those who now receive benefits under section 12(1) of the Schedule, based upon their substantial inability to perform the essential tasks of their job, continue to receive benefits even though their jobs may no longer exist due to lay-off, strike, bankruptcy or other eventualities.

I received some detailed financial information from the Applicant, including income tax returns for herself and her late husband for 1992, a schedule of family income and expenses, and a statement of assets and liabilities. All the documents were prepared after Mr. Bogdan's death. The Applicant also testified about the couple's history of work and education. For five years prior to the accident, Ms. Bogdan worked full-time and largely supported the family, while her husband attended three different universities and earned two degrees. I find that at the time of the accident, Ms. Bogdan was earning $22.38 per hour as a full-time ultrasonographer with a local hospital. In 1992, she earned $44,537 from this employment. I find that Vincent Bogdan commenced employment as an assistant professor at Lakehead University on August 15, 1992 at an annual salary of $40,000 plus $7,808 for teaching in the Department of Continuing Education. In 1992, I find he earned $19,678 from his university employment and $930 from employment with the Ministry of Community and Social Services. He drew $4,758 in unemployment insurance benefits and received $6,453 in scholarships (on $5,953 of which he paid income tax).

Although the Applicant had plans to withdraw from the paid workforce for an indeterminate time, commencing in April 1993 before the birth of her second child, I find that, as of the time of the accident on December 17, 1992, she was not principally dependent for financial support on her late husband. She was working full-time, earning $22.38 per hour and had earned $44,537 in the calendar year 1992. Her husband was also working, earning an annual salary of $47,808. The Applicant's argument that one should consider the 'crystallized,' prospective plans of families at the time of the accident is attractive, especially in the circumstances of this case. However, in my view, the Schedule's language requiring dependency "at the time of the accident" cannot be stretched forward far enough to encompass the prospective dependency planned by the Bogdans.

Alternative Argument

After the hearing concluded, I asked for additional submissions from counsel on the applicability of section 11(2)(d)(i) to the financial situation of the Applicant and her late husband at the time of the accident. That section would pay a benefit to the Applicant if Vincent Bogdan were principally dependent for financial support on her at the time of the accident.

The bald numbers, as set out above, clearly indicate that in the year of his death, Vincent Bogdan earned or received in unemployment insurance benefits or scholarship $12,718 less than the amount the Applicant earned. In the early months of 1992, Mr. Bogdan resided in the Waterloo area, where he was finishing his Master's degree in social work. The family incurred extra expenses for his apartment in Waterloo and his transportation to and from Thunder Bay. Then, in late July or early August, they learned that Mr. Bogdan had been successful in his bid to become an assistant professor at Lakehead University. From August 15, 1992 he began to receive his salary from the university.

In my view, when one looks at the family income and expenses for the calendar year of 1992, it is clear that Vincent Bogdan was principally dependent for financial support on his wife for that year. However, the language of the Schedule demands that we look to the dependency 'at the time of the accident." At the time of the accident, Mr. Bogdan was making $47,808, including his supplementary salary and inconvenience allowance. He had been earning this salary for about four months. I conclude that at the time of the accident, neither marriage partner was principally dependent for financial support on the other spouse. Each was principally dependent on his or her own income. Although they pooled their incomes and depended on each other for mutual assistance, after personal expenses, taxes and other expenses were paid, neither partner had so much left over to contribute to the other that the excess could exceed the other's income.

Expenses

The Applicant seeks an award of the expenses she has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

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 F of the Dispute Resolution Practice Code-1995 Release and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses.

In the Ralph McCormick and Economical Mutual Insurance Company case, October 2, 1991, OIC File No. A-000139, Senior Arbitrator Susan Naylor made the following comments about expenses, with which I agree:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The Director of Arbitrations approved this statement of the principles guiding an award of expenses in the appeal decision in Vito Luigi Calogero and The Co-Operators General Insurance Company, February 13, 1992, OIC File No. P-000251.

The Applicant is entitled to her expenses as set out in Schedule F of the Dispute Resolution Practice Code-1995 Release. In the event that the parties cannot agree as to the total amount of expenses, a party may apply for assessment of the expenses through the Office of the Registrar.

Order:

1. The Applicant is not entitled to a benefit under section 11(2)(c) of the Schedule.

2. The Applicant is entitled to her expenses of the arbitration.

February 6, 1996

K. Julaine Palmer

Arbitrator

Date

Schedule "A"

Authorities referred to by the parties:

Daniel Cattrysse and The Westminster Mutual Fire Insurance Company, June 21, 1993, OIC File Nos. A-001618, A-001789

Adolph and Maria Crnkovic and Simcoe & Erie General Insurance Company, April 8, 1993, OIC File No. A-002228

Inna Levitan and Liberty Mutual Fire Insurance Company, April 12, 1995, OIC File No. A-008191

Ronald L. Morley and National Frontier Insurance Company, May 15, 1995, OIC File No. A-006595

John R. Palmer and Pilot Insurance Company, January 13, 1995, OIC File No. A-009068

Dianne Raffoul and. State Farm Mutual Automobile Insurance Company, September 21, 1994, OIC File No. A-004476

Sandra Singh and. State Farm Mutual Automobile Insurance Company, June 4, 1993,

OIC File No. A-001525

Barnard v. Safeco (1986), 1986 CanLII 2522 (ON HCJ), 57 OR (2d) 558

Ireland v. Royal Insurance Canada, [1992] ILR 1-2837

Martins v. Gibraltar (1984), 1984 CanLII 5962 (ON HCJ), 6 CCLI 226

Simeonoff v. Pafco Insurance, [1992] CILR 1-2920

Miller v. Safeco (1984), 1984 CanLII 2019 (ON HCJ), 48 OR (2d) 451; (1985), 1985 CanLII 2022 (ON CA), 50 OR (2d) 797 (CA)

Vanderwal v. State Farm (1994), 1994 CanLII 10575 (ON CA), 20 OR (3d) 401

Vasey v. Economical Mutual (1986), 1986 CanLII 2558 (ON HCJ), 54 OR (2d) 692; 1987 CanLII 4279 (ON HCJ), 60 OR (2d) 64

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. 2See Sr. Arbitrator Rotter's decision in Michael Ridgley and Zurich Insurance Company, April 13, 1994, OIC File No.A-004083. (under appeal)
3. 3See, for example, the submissions of the Insurer which were rejected by Arbitrator Mackintosh in Ronald L. Morley and National Frontier Insurance, May 15, 1995, OIC File No. A-006595. (under appeal)
4. 4Adolph and Maria Crnkovic and Simcoe & Erie General Insurance Company, April 8, 1993, OIC File No. A-002228, at page 9.
5. 5Arbitrator Makepeace's comments in John R. Palmer and Pilot Insurance, January 13, 1995, OIC File No. A-9068,. Sr. Arbitrator Naylor's comments in Dianne Raffoul and State Farm Mutual Automobile Insurance, September 21, 1994, OIC File No. A-004476, and Arbitrator Draper in Frank Donohue and State Farm Mutual Automobile Insurance, August 31, 1994, OIC File No. A-006756.
6. 6(1994), 1994 CanLII 10575 (ON CA), 20 O.R. (3d) 401 (Div. Ct.)