Neutral Citation: 1996 ONICDRG 80

File No.: A-015580

ONTARIO INSURANCE COMMISSION

BETWEEN:

WENDY JAMES

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant, Mrs. Wendy James, was injured in a motor vehicle accident on May 29, 1991 ("the accident"). She applied for and received statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under Ontario Regulation 672.¹ The parties agreed that Mrs. James was entitled to weekly income benefits for 156 weeks. The parties do not agree on the quantum of weekly income benefits to which Mrs. James is entitled. In addition, the parties do not agree on Mrs. James' entitlement to payment for services provided by one, Dave James, and services provided by her children. 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 issues in this hearing are:

1. Is Mrs. James entitled to payment of $9,975.00 in respect of services provided by Mr. Dave James, pursuant to section 6(1)(f) of the Schedule?

2. Is Mrs. James entitled to ongoing payment for services provided by her children, in the amount of $60.00 per week, from February 1993, pursuant to section 6(1)(f) of the Schedule?

3. What is the proper quantum of weekly income benefits to which Mrs. James is entitled, pursuant to section 12 of the Schedule?

4. Is Mrs. James entitled to interest pursuant to section 24(4) of the Schedule, on any overdue payments, including interest on the sum of $535.00 for a training course?

5. Is Mrs. James entitled to a special award, pursuant to section 282(10) of the Insurance Act?

6. Is Mrs. James entitled to her expenses incurred in respect of this arbitration proceeding?

Result:

1. Mrs. James is entitled to payment of the amount of $2,850.00 in respect of services provided by Mr. Dave James.

2. Mrs. James in not entitled to payment in respect of services provided by her children.

3. Mrs. James is entitled to weekly income benefits totalling $15,029.19.

4. Mrs. James is entitled to interest on overdue payments, in accordance with section 24 of the Schedule.

5. Mrs. James is not entitled to a special award.

6. Mrs. James is entitled to her expenses incurred in respect of this arbitration proceeding.

Hearing:

The hearing was held in Guelph, Ontario, on November 15 and 16, 1995, before me, Lawrence Blackman, Arbitrator.

Present at the Hearing:

Applicant:

Wendy James

Applicant's Representative:

Stanley C. Tessis

Barrister and Solicitor

Insurer's Representative:

Tom Clemenhagen

Barrister and Solicitor

Witnesses:

1. Mrs. Wendy James, Applicant

2. Mr. Peter R. Christianson, President, Young Drivers of Canada

3. Mr. Dave James

4. Mr. John Seigel, chartered accountant

5. Mr. Peter James, the Applicant's husband

6. Mr. J. Patrick Flanagan, chartered accountant

Exhibits:

The exhibits entered at this hearing are listed in Appendix "A" to this decision.

Evidence and Findings:

Mrs. Wendy James is 36 years of age, married, with four children, Matthew, age 17, Shawn, age 14, Hollie, age 13, and Laura, age 8.

Mrs. James was involved in a serious motor vehicle accident on May 29, 1991 ("the accident"). Her injuries included a fractured left shoulder, a fractured pelvis, fractured ribs, and multiple soft tissue injuries. She was hospitalized for approximately two weeks, before being released to home care.

Prior to this accident, in December 1987, the Applicant's husband, Peter James, obtained a Young Drivers of Canada franchise in Bolton, Ontario. Mrs. James initially did office work for the business. In 1989, she began doing in-car instruction. In December 1990, in-class instruction was added to Mrs. James' duties. Peter James testified that before the accident, both he and his wife worked 15 to 17 hours a day. Mrs. James testified that she might not get home from work until late evening. Paid babysitters took care of the children until a parent got home.

In January 1991, the James' franchise, known as Caledon Driving School ("Caledon"), sold its Orangeville branch office. The business continued as an equal partnership between Wendy and Peter James until April 30, 1993.

After the accident, Mrs. James was off work for several months and then returned only on a part-time, intermittent, modified work basis. Mrs. James has never returned to her predominate pre-accident job duty of in-car driving instruction. These responsibilities were largely taken over by her husband, and any overflow was handled by existing employees. No new employees were hired to replace Mrs. James.

On March 1, 1993, Wendy and Peter James incorporated their driving school business under the new name of Dufferin Driver Training Inc. ("Dufferin"). Mr. and Mrs. James have been the sole shareholders in Dufferin, except from March until November 1993, when they and two other individuals, Peter and Eva Chagnon, were each 25 per cent shareholders. The Chagnons' interest in Dufferin was purchased by Mr. and Mrs. James.

Counsel agreed at the commencement of the hearing that Mrs. James met the entitlement requirements of section 12(1) of the Schedule, in that she had suffered substantial inability to perform the essential tasks of her occupation or employment for a period of 156 weeks. Counsel also agreed that the issue of entitlement for any period in excess of 156 weeks was not a matter in dispute in this arbitration proceeding.

1. Supplementary Medical and Rehabilitation Expenses

(a) Mr. Dave James

Following her discharge from hospital, Mrs. James received assistance, until December 1991, from her mother-in-law, home care, a nurse, and friends, for her personal care and for the running of her home.

On June 24, 1991, Mr. Stephen Greig, an Allstate Senior Claims Examiner, wrote to Mr. and Mrs. James confirming his discussion of "the employment of a person on a daily basis for approximately three to four hours per day at a rate of $10.00 per hour" to assist with household needs.²

Mrs. James subsequently provided Allstate with a schedule showing payments from August 3, 1991 to December 29, 1991, for such assistance, at the hourly rate of $10.00. The weekly amounts ranged from approximately $20.00 to $50.00 and averaged $36.50.³

In or about September 1991, Mrs. James wrote to Allstate stating that, "I do most housework myself now and I drive some although I find my arm gives me trouble when turning ect."(sic)⁴

Mrs. James described herself as a perfectionist. She testified that her usual pre-accident routine included cleaning the toilets and vacuuming daily, and washing the floors every second day, in addition to more standard cleaning, cooking and family care. In her endeavour after the accident to meet her usual high household standards, she became very stressed and found herself yelling and "losing it" with her children.

To assist the Applicant both physically and mentally, and to aid in her rehabilitation, Wendy and Peter James decided, shortly after Christmas of 1991, to hire Mr. James' cousin, Dave James, as a live-in assistant. Mrs. James, her husband, and Dave James all testified that Dave James was given weekly spending money of $125.00 weekly in addition to free room and board, which they estimated to be worth $50.00 per week.

In return, Dave James was responsible for all household tasks including, cooking, cleaning, vacuuming, washing dishes, making breakfasts, doing laundry, making beds, washing floors, windows and walls, cleaning the bathrooms, shovelling snow, and looking after the children. Dave James testified that he worked almost 20 hours a day, seven days a week. Mrs. James testified that Dave James worked six to eight hours a day, seven days a week. Mr. and Mrs. James assisted Dave James in obtaining his driver's license so that he could drive Mrs. James to the Caledon office as well as do the family shopping. The Applicant and Dave James, however, differed as to how often the latter would drive Mrs. James to her place of work.

On February 18, 1992, Mrs. James wrote Allstate indicating that since she could not "do heavy work at home, such as vacuuming, making and changing bunk beds and floors, bending to clean tubs, ect.,"⁵ (sic) her lawyer advised that she should be reimbursed the amounts that she had paid a friend. Mrs. James indicated that she would provide the dates and times. It would appear from this letter that Mrs. James was referring to amounts paid since August 1991, and not necessarily to Dave James. The only evidence as to when the claim for payment in respect of Dave James' services was first submitted to Allstate was the report of Mediator, issued March 8, 1995, which lists as issues in this proceeding the claims for reimbursement of housekeeping and home care services provided from December 31, 1991, and for a training course taken in November 1993.

Dave James stayed with the Applicant's family until February 1993. Mrs. James testified that at that point, she was feeling better, her children were older, and she could no longer afford to pay Dave James.

The Applicant claimed entitlement to payment in respect of services provided by Dave James, of the sum of $9,975.00 (representing 57 weeks from the end of December 1991 until the beginning of February 1993 at $175.00 per week), pursuant to section 6(1)(f) of the Schedule which states:

6. (1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident all reasonable expenses resulting from the accident . . . for,

(f) other goods and services, whether medical or non-medical in nature, which the insured person required because of the accident.

The Applicant's counsel argued that the services provided by Dave James were necessary for the Applicant’s rehabilitation (although there was no evidence that the Insurer ever requested confirmation that this expense was necessary for Mrs. James' treatment or rehabilitation, pursuant to section 6(4) of the Schedule). He further submitted that the accounts were reasonable as Allstate, in June 1991, had proposed paying for three to four hours of work a day at $10.00 per hour. Mr. Tessis pointed out that 3.5 hours a day, multiplied by 5 weekdays per week, multiplied by $10.00 an hour, equals $175.00 per week.

The Insurer's counsel indicated that Allstate was prepared to pay a reasonable amount for the services provided by Dave James, but submitted that live-in help was not necessary, and further argued that many of Dave James' duties were not required because of the accident.

I am in agreement with the Insurer's submissions. I find that the Insurer's June 1991 suggestion was no longer appropriate based on Mrs. James' level of recovery by the end of the year⁶ and on her own admission in her September 1991 correspondence with Allstate that she was able to do most of her housework. The duties performed by Dave James extended far beyond the physical tasks for which disability was being claimed. I am satisfied that a full-time live-in housekeeper was not reasonably required as a result of the accident for the period between December 1991 and February 1993.

Reasonable is defined in the Concise Oxford Dictionary, Eighth Edition, as "within the limits of reason; not greatly less or more than might be expected." This definition contemplates an objective, rather than a subjective standard. Mrs. James testified that she was a perfectionist. One can surmise that after the accident Mrs. James was distressed at not being able to keep her home up to her usual exacting standards. Perfection, however, is not the definition of reasonable.

Based on my review of the oral evidence, and the exhibits filed, I am satisfied that during the period of Dave James' stay, Mrs. James reasonably required the assistance of an individual to perform the more physically demanding household tasks enumerated in her February 18, 1992 correspondence.

I did not receive any evidence breaking down Dave James' hours of work according to task, nor did I receive any evidence as to any physically strenuous household duties which were not performed by the James' housekeeper in the months immediately preceding the arrival of Dave James. Based on the claims submitted by Mrs. James for the months preceding the arrival of Dave James, I find that hiring Dave James five hours a week, at $10.00 per hour, was reasonably required because of the accident. Although I find that Mrs. James continued to physically improve during Dave James' stay, as evidenced by her increasing work hours and abilities, I find that Mrs. James' successful graduated work return reasonably required a consistent level of help from December 1991 until February 1993.

I therefore accept the 57 week period worked by Dave James at $50.00 per week. Accordingly, the total amount owing in respect of the services performed by Dave James is $2,850.00.

(b) the children

Mrs. James testified that subsequent to the departure of Dave James, in addition to "their normal duties," Matthew did the vacuuming, Shawn washed the bathtubs and floors, and Hollie did the "brunt" of the extra duties including making lunches, doing the dishes, and taking care of the youngest child, Laura. Mrs. James testified that she had promised her three oldest children $20.00 a week each, ongoing from February 1993, for performing these duties.

Although a functional abilities evaluation by Vocational Pathways Inc., dated February 3, 1995, indicated that Mrs. James' subjective assessment of her limitations "appeared to be an under-estimation of her abilities as were later demonstrated during physical tolerance testing,"⁷ her assessed limitations included restricted repetitive lifting and carrying for more than seven minutes, restricted low level activity, restricted repetitive left arm forward and sideways stance, and restricted bilateral grip strength.

Mrs. James acknowledged in her evidence that she was feeling better by February 1993. One can logically assume that her ability to perform household duties was also improved.

Mrs. James further acknowledged that her children were now older and, therefore, able to take over many duties once performed by their mother. I find that some of these duties, such as making lunches, cannot be said to have been required because of injuries sustained by Mrs. James in the accident. I further find that the other duties now being done by the children are not above and beyond what children of such an age might regularly be expected to perform, especially in a large and busy household as the James', where both parents worked long hours prior to the accident. I therefore find that the expense claimed for the children is not required by the accident, and therefore the Insurer is not obliged to pay this claim.

2. Calculation of Weekly Income Benefit

(a) Gross Weekly Income from Occupation or Employment

Pursuant to subsection 12(4) of the Schedule, an insured's weekly income benefit is calculated as:

(b) 80 per cent of the insured person's gross weekly income from his or her occupation or employment, less any payments for loss of income, except Unemployment Insurance benefits,

(i) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan, or

(ii) received under any sick leave plan.

[emphasis added]

The maximum benefit payable is $600.00 (unless an optional benefit has been purchased). Section 15 of the Schedule further states that:

15. The insurer may deduct from any benefit payable under this Part 80 per cent of any income received or available from any occupation or employment subsequent to the accident.

Mrs. James chose to base her gross weekly income on the four weeks preceding the accident, pursuant to subsection 12(7)(l)(i) of the Schedule. As Mrs. James' income was derived from a 50 per cent partnership in Caledon, the first step in the computation of her weekly income benefit is to determine Caledon's gross weekly income for the designated four weeks.

The Applicant's accounting expert, Mr. John Seigel, estimated Caledon's revenue for the relevant weeks to be $9,711.00, based on a prorated calculation of the company's May 1991 cash receipts of $10,752.00. Although Mr. Seigel acknowledged that cash receipts (which include deposits for work not yet performed) are not the same as income, he felt that the accuracy of his methodology was confirmed by the fact that Caledon's average monthly gross income was $10,689.00 in the fiscal year ending April 30, 1992.

Allstate's accounting expert, Mr. J.P. Flanagan, agreed that cash receipts are not the same as income. Mr. Flanagan also agreed with Mr. Seigel that an absolutely precise figure for Caledon's exact income for the four weeks prior to the accident could never be obtained. Mr. Flanagan believed that a more accurate method of estimating Caledon's gross weekly income was to subtract from the May cash receipts the estimated customer deposits collected in that month, and add back the documented customer deposits as of April 30, 1991. Mr. Flanagan's prorated figure for Caledon's average gross weekly income for the four weeks prior to the accident was $9,614.00, less than one hundred dollars apart from Mr. Seigel's figure.

Allstate argued that Mr. Seigel's approach was inappropriate as it employed post-accident income in its calculation, whereas the Schedule calculated gross weekly income based on income preceding the accident.

I agree with Allstate that gross weekly income must be based on a pre-accident period. However, both experts testified that the best one could hope to attain in calculating a self-employed person's gross weekly income, based on the four weeks preceding an accident, was a reasonably accurate estimate.

I am satisfied, on a balance of probabilities, that Mr. Seigel's calculation of $9,711.00 is a fair and reasonable estimate of Caledon's gross weekly income for the four weeks preceding the accident, confirmed both by Mr. Seigel’s method of verification, and by Mr. Flanagan's analysis.

(b) Ceasing Expenses

(i) Theory

Paragraph 12(7)(3) of the Schedule states that:

Business expenses which cease as a result of the accident shall be deducted from a person's income from self-employment before calculating his or her gross weekly income.

I stated in the Kotak⁸ decision that "the Schedule is completely silent as to how an insured's gross weekly income is to be calculated when an insured's business continues after the insured becomes disabled as a result of a motor vehicle accident."

Both experts agreed that to give section 12(7)(3) a literal interpretation (resulting in no expenses being deducted from pre-accident income, as the James' business and its expenses continued after the accident), would result in Mrs. James receiving either a gross overpayment or underpayment, depending on whether the post-accident income deducted was gross or net (section 15 being silent in this regard).

In Kotak, I stated that:

I find in principle, that the Schedule does not contemplate the weekly income benefit to be a completely arbitrary amount. Rather, that sum is meant to bear a relationship to the insured's substantive loss following an accident, subject to a mandated benefit ceiling of $600.00 per week, and a weekly benefit floor of $185.00 (which may be reduced by collateral benefits and post-accident income).

I find that giving a literal interpretation to section 12(7)(3) of the Schedule in this case, would result in a completely arbitrary result, bearing little relationship to Mrs. James' actual substantive loss following this accident.

Both experts agreed that a fair and reasonable approach in this case was to define both section 12 "gross weekly income" from occupation or employment and section 15 "income received or available from any occupation or employment " as meaning gross revenue less "ceasing expenses." The experts testified that the term "ceasing expenses" is not an accounting term. I find the term to mean variable expenses, for which a business does not have a continuing obligation, and which could be ended upon the happening of a fortuitous event, such as a motor vehicle accident. The experts further agreed that this approach was preferable as it matched the definitions of pre-accident and post-accident income, consistency being a fundamental accounting principle.

I find that the approach put forward by both accounting experts does provide a fair and reasonable methodology and is appropriate in determining the weekly benefit payable in this particular case.

(ii) Application in this case

The parties agreed on the theory and categories of ceasing expenses. They disagreed on the calculation.

The experts concurred that to consider only those expenses incurred in the four weeks prior to the accident would lead to an inaccurate result. Both agreed that using the expenses incurred over the entire prior year was inappropriate, as this period included data from the Orangeville office, which had been sold in January 1991, that is, some four months before the accident.

Mr. Seigel testified that in arriving at a fair, accurate and reasonable result, it was important to match the period used to calculate gross weekly income with the period used to calculate ceasing expenses. Mr. Seigel further stated that, in principle, the longer the period of time used, the more accurate the result, as the expenses paid within any restricted time period might cover a much longer time frame.

Using data from Caledon's April 30, 1992 fiscal statement (which he had also used to confirm gross weekly income), Mr. Seigel calculated Caledon's ceasing expenses for the four weeks prior to the accident as $5,860.00. Caledon's net income was therefore $3,851.00 (i.e. $9,711.00 minus $5,860.00). Mrs. James' allocation, as a 50 per cent partner, was $1,925.50. Mrs. James' average weekly income was hence $481.38. Eighty per cent of this amount is $385.10, being Mr. Seigel's calculation of Mrs. James' weekly benefit.

Mr. Flanagan agreed that it was not possible to precisely determine Caledon's ceasing expenses for the four weeks preceding the accident. He testified that a reasonable approximation of such expenses could be obtained from the four months preceding the accident (i.e., February 1 to May 31, 1991). This would use data subsequent to the sale of the Orangeville office, which Mr. Flanagan assumed was "untainted" by that operation. The Insurer submitted that the post-accident data would be inaccurate as one could not assume that the period after the accident was reflective of the pertinent pre-accident period, and in any event, the Schedule mandates looking only at the period preceding the accident.

Mr. Flanagan estimated Caledon's ceasing expenses in the four pre-accident weeks to be $9,023.47. It was however established in cross-examination that Mr. Flanagan incorrectly included a $2,742.60 management draw as a ceasing expense. The Applicant also questioned whether leasing expenses of $839.94 should properly have been included by Mr. Flanagan as a ceasing expense. The Applicant further questioned whether the expenses shown in the Caledon books in the four months pre-accident might still be tainted by the Orangeville operation.

I find that the sum of $2,742.60 should not have been included as a ceasing expense.

Using Mr. Seigel's gross income figure, and Mr. Flanagan's revised ceasing expense figure (i.e. adding back the management draw), a weekly income benefit of $343.01 is derived. This sum is very close to Mr. Seigel's figure of $385.10. Both experts agreed that a reasonable approximation was the best that could be arrived at in calculating Mrs. James' weekly benefit. I am satisfied, on the balance of probabilities, that Mr. Seigel's figure of $385.10 is such a reasonable approximation.

(c) Deduction of post-accident income

(i) Definition of Income

Following the accident, Mrs. James was completely off work until November 8, 1991. She then returned on a part-time intermittent basis to Caledon, initially doing office work, and subsequently, in-class instruction. She has not returned to in-car instruction. Peter and Wendy James both testified that Mrs. James' in-car lessons were largely taken over by her husband and to a much lesser extent by existing employees. No new employees were hired to replace Mrs. James. When Mrs. James initially returned to work, Caledon had a full-time office manager, and Mrs. James' presence was largely superfluous, having more of a rehabilitative than an economic purpose.

Despite Mrs. James' prolonged absence from work, and her subsequently substantially reduced working hours, Caledon's accountant, Mr. Yasha Bushuev, recommended that the company's profit continue to be divided for tax purposes equally between the spouses. This advice was accepted by Peter and Wendy James.

Notwithstanding the division of income agreed to by the Applicant and her husband, Mr. Tessis argued that I should look to the factual substance of this case, and not to mere form. He argued that Mrs. James' declared post-accident income did not reflect the income actually earned by her active participation in the business, but was rather a combination of earned income and income from her investment in her business. Mr. Seigel reallocated Caledon's (and Dufferin's) income between the partners, based on the assumption that the value of Mrs. James' service was equivalent to her level of service. Therefore, if Mrs. James worked only two days a week for a certain period (instead of her usual five days) her earned post-accident income would be 40 per cent of her half share of the business' net income (i.e., after deducting ceasing expenses).

I understand the Applicant's distinction between income "earned" from the fruits of one's physical labour, and income received as a result of one's investment and planning. I also understand that both Mrs. James' pre-accident and post-accident income would consist of both types of income. However, the Applicant did not differentiate between earned income and income from investment or property, when calculating her gross weekly income pursuant to section 12 of the Schedule.

Consistency is a fundamental accounting principle. I understand this principle to mean "that accountants must measure and disclose information about an entity in the same manner from one accounting period to the next."⁹ To define pre-accident and post-accident income differently in this case, as is implied by the Applicant's approach, would be to unjustifiably inflate the Applicant's benefit. I agree with the following comments of Arbitrator Palmer:

I accept that the Applicant clearly has the right to structure his financial affairs, within the law, in whatever manner he chooses. However, I find I cannot accept inconsistent evidence which restates the Applicant's income from employment or self-employment so as to maximize his benefit under the No-Fault Benefits Schedule.¹⁰

However, I agree that "the inquiry into the amount of an insured person's pre and post-accident income should go beyond mere form, to examine the substance of each individual’s financial situation."¹¹ Senior Arbitrator Naylor (as she then was) has stated that "arbitrators have looked beyond the form of financial arrangements reached in a family business, in determining whether income is available to a family member."¹² Changes to the form of an insured's financial affairs may be permitted where there is satisfactory evidence that the change would more accurately represent the insured's true financial situation.

In this case there has been a substantive change in the partnership relationship following the accident. Peter James largely took over his wife's workload. Such extra hours are not reflected in the company books as an increased expense. They are not reflected in the company statements, nor in the Applicant's tax returns.

Yet a significant portion of the Applicant's post-accident income is a result not of her labour, nor of her investment, but results from her husband's additional labour. Is the Insurer entitled to rely solely on the Applicant's declared income?

I accept the Applicant’s income tax returns as prima facie evidence of her post-accident income. I am prepared to look beyond the form of the financial arrangements reached between husband and wife in this case. However, the onus is on the Applicant to present reliable and cogent evidence to overcome the prima facie presumption. The necessary evidence in this case would pertain to the extra hours worked by Peter James, and the value of such extra hours.

I received only very vague estimates as to the extra hours worked by Peter James. Mrs. James testified that no records were kept of Peter's additional work after the accident. I received no evidence as to the value of these hours.

I therefore have no means of accurately or fairly redetermining the financial arrangements agreed to by Wendy and Peter James. The Applicant has thus not met the onus of supplanting the prima facie evidence of her post-accident income. Accordingly, I find the Applicant's post-accident income from self-employment to be 50 per cent of her gross income less ceasing expenses.

(ii) Employed or Self-employed

Upon the incorporation of Dufferin on March 1, 1993, Mrs. James began receiving management wages. Both accounting experts agreed that any deduction for post-accident income after that date should continue to be based on Mrs. James' income from self-employment, and not her income from employment.

The Guideline for Identifying Self-employed Individuals, Commissioner's Guideline No. 1/95, Ontario Insurance Commission, April 25, 1995, however, states in part:

This guideline should be used when it has already been established that the individual is employed, but it is unclear whether the individual is self-employed or what the relationship is between the individual and an employer. Under the Statutory Accident Benefits Schedule (SABS), self-employment income is treated differently than employment income.

For the purposes of the SABS, an individual is considered to be self-employed if the business he or she derives his or her remuneration from is not incorporated under any law. For example, sole proprietorships and partnerships are considered to be self-employment situations. If the individual derives his or her remuneration from an incorporated business, then he or she is considered to be an employee of the corporation.

Section 268.3(2) of the Insurance Act states that a "guideline shall be considered in any determination involving the interpretation of the Statutory Accident Benefits Schedule" (emphasis added). The Guideline is hence to be taken into account by, but is not binding upon an arbitrator.

I find the guideline to be of little assistance in the present case, where it is agreed that Mrs. James was self-employed at the time of the accident, but there has been a subsequent change in the organization of her company, of which she remains a principal. The pertinent question in this case is what is encompassed under section 15, which speaks of post-accident income which is "received or available from any occupation or employment."

I agree with Arbitrator Sampliner that "the word 'available' is a broad term."¹³The Concise Oxford Dictionary, Eighth Edition, defines "available" as follows: "1 capable of being used; at one's disposal. 2 within one's reach." As a partner and shareholder in Dufferin, Mrs. James' had at her disposal, or within her reach, her agreed share of income from the Dufferin operation, over and above what she received in management wages.

Furthermore, the accounting principle of consistency supports Mrs. James' income being calculated in a similar fashion both before and after the accident. I find that with the exception of the brief "Chagnon" period, the James' franchise continued essentially as a partnership where one-half of the profits of the business was at the disposal of, or available to Mrs. James. The allocation of a salary to Mrs. James was arbitrary. Therefore, I find that Mrs. James is to be considered to be self-employed during the entire pertinent 156 week period.

(iii) Period of Deduction

The Applicant submitted that the section 15 deductions should be matched against specific periods, based on her level of work participation.

The Insurer argued that the total section 15 deduction for the agreed 156 weeks of entitlement should be deducted from the total section 12 benefit calculation.

I agree with the comments of former Senior Arbitrator Naylor, ¹⁴echoed by Arbitrator Robinson,¹⁵ that: "Rehabilitation is an essential feature of the accident benefits scheme. Rehabilitation includes the goal of safely returning the injured person to the work force."

I further agree with Arbitrator Robinson that deducting post-accident income on a lump-sum or "carry forward" basis would be a disincentive to an insured returning to work if the post-accident income which exceeded the benefit payable in one period was applied against another period of disability. As indicated by Arbitrator Robinson, arbitrators have often in the past matched post-accident income to specific periods.

In this specific case, I firstly find it appropriate to match post-accident income against the set fiscal periods of Caledon (ending April 30) and Dufferin (ending December 31). Secondly, I find March 1, 1993 to April 30, 1993 to be an appropriate matching period, as it is an overlapping interval covering both companies' fiscal periods.

Thirdly, Mrs. James received weekly collateral benefits of $167.84 from September 28, 1991 until September 7, 1992. Following the ratio in Boltman, I find it appropriate to restrict the deduction of the weekly benefit to the actual calendar week for which the collateral benefit was paid, and not "carry forward" the deduction. The weekly benefit during this period is therefore $217.26 (i.e. $385.10 less $167.84). The fiscal periods set out above must be subdivided to account for this period.

Both parties agreed on the post-accident income, calculated as equalling gross income less ceasing expenses. The weeks of benefits payable were also agreed by the parties. The parties further agreed that the short participation of the Chagnons in Dufferin was not to be taken into consideration. My calculation of the benefits payable is therefore as follows:

Time Period

Number of Weeks

Total Benefit Payable Before Deducting Post-accident Income

Post-accident Income

Net Benefit Payable

June 5, 1991 to September 27, 1991

16.3

$ 6,277.13 (@ $385.10 per week)

$ 6,555.86¹⁶

$ 0.00

September 28, 1991 to April 30, 1992

30.6

$ 6,648.16 (@ $217.26 per week)

$12,307.32¹⁷

$ 0.00

May 1, 1992 to September 7, 1992

18.6

$ 4,041.04 (@ $217.26 per week)

$ 3,861.79¹⁸

$ 179.25

September 8, 1993 to February 8, 1993

24.76

$ 9,511.97 @ $385.10 per week)

$ 5,128.29¹⁹

$ 4,383.68

March 1, 1993 to April 30, 1993

8.7

$ 3,350.37 (@$385.10 per week)

$ 3,088.15²⁰

$ 262.22

May 1, 1993 to December 31, 1993

35.0

$13,478.50(@ $385.10 per week)

$ 5156.77²¹

$ 8,321.73

January 1, 1994 to June 4, 1994

22.1

$8,510.71 (@ $385.10 per week)

$ 6,628.40²²

$ 1,882.31

Total

156.0

$ 15,029.19

Mrs. James is thus entitled to weekly income benefits in the amount of $15,029.19.

3. Interest

The following provisions of section 24 of the Schedule are pertinent to the question of interest in this case:

24. -(1) Amounts payable under Parts II, III and V are overdue if not mailed or otherwise delivered by the insurer within thirty days after it has received a completed application for statutory accident benefits.

(2) Amounts payable under Part IV are overdue if not mailed or otherwise delivered by the insurer within ten days after it has received a completed application for statutory accident benefits or if the insurer fails to make a payment required by subsection (3).

(3) Payments under Parts IV and V shall be mailed or otherwise delivered at least once every second week while the insurer remains liable to the insured person.

(4) The insurer will pay interest on overdue payments from the date they become overdue at the rate of 2 per cent per month.

Weekly income benefits come under Part IV of the Schedule. I find that each weekly benefit became overdue 14 days after the commencement of that week, and interest is payable at the rate of 2 per cent per month until the payment is mailed or otherwise delivered by the Insurer to the Applicant or pursuant to her direction.

Section 6 expenses come under Part II of the Schedule. The Applicant submits that interest on such expenses runs from 30 days after the expense is incurred.

I do not agree.

Interest is only payable on payments which are overdue. Section 24(1) states that amounts payable under Part II are overdue if not mailed or otherwise delivered within 30 days after the Insurer has received a completed application for statutory accident benefits. The legislation does not provide any guidance as to what constitutes a "completed application." However, as the interest rate does not vary with the bank rate (as does the rate set in the Courts of Justice Act, R.S.O. 1990, c. C.43), but is a fixed rate which is more punitive in nature, I find that, at the very least, the application must provide sufficient specifics as to the nature and amount of the claim so that the insurer can determine what is being sought.

Specifics of the claim for payment of the services of Dave James, the children, and the sum of $535.00 paid by cheque dated November 19, 1993 to Young Drivers of Canada for an upgrading course for Mrs. James are set out in the Report of Mediator issued March 8, 1995, following a mediation between the parties. The mediator is obligated, under the Dispute Resolution Practise Code, to record the issues that remain in dispute and provide a copy of the Report to the parties. This is the earliest indication of when the specifics of these claims were received by the Insurer.

I therefore find that the amounts payable in respect of the services provided by Dave James and the sum of $535.00 paid to Young Drivers of Canada became overdue 30 days after the Report of the Mediator, and that the Insurer will pay interest on the sums of $2,850.00 and $535.00 at the rate of 2 per cent per month, from that date until the payment is mailed or otherwise delivered to the Applicant or pursuant to her direction.

4. Special Award

The Applicant claims a special award pursuant to section 282(10) of the Insurance Act. This section states:

(10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

No submissions were given as to why a special award should be ordered in this case.

I am satisfied that the Insurer had a bona fide dispute with the Applicant with regard to the issues in this arbitration. I therefore am not satisfied that the Insurer has unreasonably withheld or delayed payment.

Accordingly, I find that the Applicant is not entitled to a special award.

5. Expenses

Mrs. James has been successful in part of her claim. I did not receive any submissions that an award of expenses should not be made in this case. I find no reason in this matter to depart from the usual order that the Applicant is entitled to her expenses incurred in respect of an arbitration proceeding. I therefore exercise my discretion and award Mrs. James her expenses incurred in respect of this arbitration proceeding, in accordance with Ontario Regulation 664, R.R.O., 1990. In the event that the parties cannot agree on the expenses to which the Applicant is entitled, a party may apply to the Registrar for an assessment of expenses.

Order:

1. Mrs. James is entitled to payment of the amount of $2,850.00 in respect of services provided by Mr. Dave James.

2. Mrs. James is not entitled to payment in respect of services provided by her children.

3. Mrs. James is entitled to weekly income benefits totalling $15,029.19.

4. Mrs. James is entitled to interest on overdue payments, in accordance with section 24 of the Schedule.

5. Mrs. James is not entitled to a special award.

6. Mrs. James is entitled to her expenses incurred in respect of this arbitration proceeding.

May 17, 1996

Lawrence Blackman

Arbitrator

Date

APPENDIX A

Exhibit 1

Three photographs taken May 30, 1991 or May 31, 1991, showing damage to the Applicant’s motor vehicle as a result of the motor vehicle accident of May 29, 1991;

Exhibit 2

Original "to whom it may concern letter" signed by David James, dated February 20, 1995;

Exhibit 3

Copy of cheque bearing #0110, to YDC Head Office from Dufferin Driver Training Inc., dated November 19, 1995;

Exhibit 4

Organization Analysis & Design test taken by Mrs. Wendy James, on November 21, 1993;

Exhibit 5

Copy of letter from Mrs. Wendy James to Mr. Stephen Greig of Allstate Insurance Company of Canada, dated November 13, 1991;

Exhibit 6

Copy of letter from Mrs. Wendy James to Mr. Stephen Greig of Allstate, dated February 18, 1992;

Exhibit 7

Medical Brief;

Exhibit 8

"To whom it may concern" letter from Mrs. Wendy James, undated;

Exhibit 9

Original undated letter from Mrs. Wendy James;

Exhibit 10

Original letter from Allstate, to Mrs. Wendy James and Mr. Peter James, dated June 24, 1991;

Exhibit 11

Original correspondence from Allstate to Mrs. Wendy James, dated August 12, 1991, October 4, 1991, January 17, 1992, May 22, 1992, August 27, 1992, November 20, 1992, November 30, 1992, December 28, 1992, March 3, 1993, March 29, 1993, and June 28, 1994;

Exhibit 12

Copy of memo from Ms. Renee A. Bailey to Mr. Peter Christianson, dated April 19, 1990;

Exhibit 13

Copy of letter from Mr. Peter James to Mr. Peter Christianson, dated October 15, 1990;

Exhibit 14

Student enrollments for the Bolton franchise of Young Drivers of Canada, for the calendar years 1991 and 1992;

Exhibit 15

Report of Mr. John Seigel, C.A., Price Waterhouse, dated November 9, 1995;

Exhibit 16

Summary of cash receipts for Caledon Driving School, for the 1991 calendar year;

Exhibit 17

Handwritten sheet of calculations of Mr. John Seigel, C.A., Price Waterhouse;

Exhibit 18

Report of Mr. J. Patrick Flanagan, C.A., J.P. Flanagan & Associates Ltd., dated November 13, 1995;

Exhibit 19

Report of Mr. J. Patrick Flanagan, C.A., J.P. Flanagan & Associates Ltd., dated October 5, 1995;

Exhibit 20

Amendments to report dated November 13, 1995, of Mr. J. Patrick Flanagan, C.A.;

Exhibit 21

Caledon Driving School, unaudited Financial Statements, for the year ended April 30, 1991;

Exhibit 22

Caledon Driving School, unaudited Financial Statements, April 30, 1992;

Exhibit 23

Copies of eight ledger sheets for the Bolton franchise of Young Drivers of Canada, for the period January 1, 1991 to December 31, 1991;

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. 2Exhibit 10.
3. 3Exhibit 8.
4. 4Exhibit 9.
5. 5Exhibit 6.
6. 6Exhibit 7, Tab 7, report of Dr. David W. Pitel.
7. 7Exhibit 7, Tab 8.
8. 8Bharat Kotak and CAA Insurance Company (Ontario), December 20, 1995, OIC File No. A-011445, at page 16.
9. 9Intermediate Accounting, First Canadian Edition, Volume 1, at page 48.
10. 10Peter Bonitatibus and Wellington Insurance Company, April 8, 1993, OIC File No. A-000082 (no. 2).
11. 11Thomas George Piper and Zurich Insurance Company, December 6, 1993, OIC File No. A-002585.
12. 12E.Z. and Royal Insurance Company of Canada, November 14, 1995, OIC File No. A-005237.
13. 13Adozinda Oliveira and Zurich Insurance Company, April 21, 1995, OIC File No. A-002691, at page 8.
14. 14Francois Philippe and Royal Insurance Company, January 24, 1994, OIC File No. A-001736, at page 15.
15. 15Michael Boltman and Personal Insurance Company of Canada, August 25, 1995, OIC File No. A-013610, at page 10.
16. 16$48,264.00 income divided by 2 partners, divided by 48 weeks, multiplied by 80%, multiplied by 16.3 weeks.
17. 17Calculation the same as footnote 16, but multiplied by 30.6 weeks instead of 16.3 weeks.
18. 18$26,991.00 divided by 2 partners, divided by 52 weeks, multiplied by 80%, multiplied by 18.6 weeks.
19. 19Same as footnote 18, but multiplied by 24.7 weeks, not 18.6 weeks.
20. 20[($26,991.00 + 2 + 52) + ($16,207.00 + 2 + 44)].8, multiplied by 8.7 weeks.
21. 21$16,207.00 divided by 2 partners, divided by 44 weeks, multiplied by 80%, multiplied by 35.0 weeks.
22. 22$16,571.00 (see Exhibit 20) divided by 2 partners, divided by 22.1 weeks, multiplied by 80%, multiplied by 22.1 weeks.