Neutral Citation: 1997 ONICDRG 131

OIC A-011386

BETWEEN:

MAREK ZDEBSKI

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION

The Applicant, Marek Zdebski, was injured in a motor vehicle accident on December 9, 1992. Allstate Insurance Company of Canada (Allstate) paid Mr. Zdebski weekly income benefits in the amount of $581.60 under section 12(1) of Ontario Regulation 672.¹ Allstate terminated benefits on January 26, 1994 on the basis that Mr. Zdebski no longer suffered a substantial inability to perform the essential tasks of his employment as a drywall installer and glazier.

Mr. Zdebski maintains that he is still disabled from performing his pre-accident employment and seeks further weekly income benefits in a higher amount of $590.20. Allstate now claims it overpaid weekly income benefits to Mr. Zdebski and seeks repayment. The parties were unable to resolve their disputes through mediation and Mr. Zdebski applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended by Bill 68 (the "Act").

Is Allstate required to pay weekly income benefits under section 12(1) of the Schedule from January 27, 1994 on the basis that Mr. Zdebski continues to suffer a substantial inability to perform the essential tasks of his pre-accident employment?
If so, what quantum of weekly income benefit is payable?
Is Mr. Zdebski required to repay any portion of weekly income benefits paid by Allstate during the period December 17, 1992 to January 26, 1994 under section 27(1) of the Schedule?
Is Mr. Zdebski entitled to payment of interest on any amounts owing and his expenses incurred in the hearing, including the expense of a medical report prepared by Dr. Walter F. Kean in the amount of $2,407.50?

Allstate shall pay weekly income benefits in the amount of $522.74 from January 27, 1994 ongoing, under section 12(1) of the Schedule.
Mr. Zdebski shall repay Allstate $3,413.88 under section 27(1) of the Schedule. Allstate is entitled to a credit of this amount to reduce the amount of weekly income benefits owing under paragraph 1.
Allstate shall pay interest on the remaining amount owing under paragraph 1, pursuant to section 24(4) of the Schedule.
Allstate shall pay the expenses incurred by Mr. Zdebski in respect of this proceeding as set out in Schedule 1 of the Dispute Resolution Practice Code (August 1995) and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses, including $800 in respect of Dr. Walter F. Kean's report dated September 8, 1994.

The hearing was held in St. Catharines, Ontario on May 8, 9 and 10, 1995, October 25 and 26, 1995, before me, Janice Mackintosh, arbitrator. A list of those in attendance at the hearing, the exhibits filed and other documents before the arbitrator, is contained in Appendix A. See endnotes for numbered references.

Essential tasks of pre-accident employment:

Mr. Zdebski relies upon work he performed in the four weeks immediately preceding his car accident of December 9, 1992 to support the claim that he continues to be "substantially disabled from performing the essential tasks of his pre-accident employment." He states that he was employed as a glazier by Janusz Contracting Ltd. from November 12 to November 27, 1992 and installed drywall for Majerski Construction, from November 30 to December 9, 1992. I received no submissions concerning Mr. Zdebski's ability to engage in any occupation or employment for which he is reasonably suited by education, training, or experience under section 12(5)(b) of the Schedule, and I make no determination of this issue.

Mr. Kolodziejczyk, of Janusz Contracting Ltd., Mr. Majerski, of Majerski Construction, and Mr. Zdebski, provided detailed descriptions of Mr. Zdebski's pre-accident work. I found their testimony to be consistent, credible and persuasive on this issue. I conclude that at the time of his accident Mr. Zdebski was engaged in heavy work for up to 10 hours a day for up to five consecutive days a week. The National Occupational Classification (NOC) defines heavy work as "handling loads more than 20 kg." (ie. 44 pounds) and classifies measuring, cutting and fitting drywall sheets for installation on walls and ceilings as "heavy work".ⁱ

As an installer of drywall in commercial buildings, Mr. Zdebski lifted large sheets of gyprock or fireproof drywall from the floor, held them up with one hand while manipulating a screw gun with the other hand to screw the sheets into place. Mr. Zdebski testified that at times when he worked on a ceiling, he used his head to hold drywall in place. This work was generally done in pairs as a sheet of commercial grade fireproof drywall or cement gyprock could weigh up to 100 pounds. I find that drywalling work requires bending, lifting, carrying and twisting, as well as working from a scaffold.

Mr Kolodziejczyk and Mr. Zdebski also described his work as a glazier, replacing damaged panels of glass on the balconies of several high-rise apartment buildings in Toronto. This work was performed from a swing stage which is a wooden platform, suspended from the roof of a building and lowered down the outside wall by a system of lines, pulleys and weights. The glaziers erected the swing stage, with licensed supervision, at the beginning of each day and loaded the swing stage as required throughout the day. Each swing stage held up to three workers, seven panels of glass and one pail of glazing compound weighing up to 100 pounds. Mr. Zdebski knocked the damaged glass panel out of the balcony frame and lifted a replacement glass panel from the swing stage, over the balcony rail, to another worker who placed the glass into the balcony frame. He often had to grind the edges of the glass with a grinding machine before fixing the panel into place with glazing compound (putty). On this job, each balcony had three panels of wired glass, each weighing approximately 50 pounds.

Mr. Kolodziejczyk testified that swing stage work is seasonal and is generally done between April and November. On rainy days, the swing stage crews waterproofed apartment basements by digging down the basement by hand. Mr. Kolodziejczyk testified that a worker needed to be strong and in good physical condition to perform these jobs. In addition, a worker required good balance and a tolerance for heights because the swing stage moved in the wind. I accept Mr. Kolodziejczyk's description of this work and its physical demands.

Substantial inability to perform:

Mr. Zdebski was 32 years old when he was involved in a car accident on the evening of December 9, 1992. A car made an unexpected left hand turn into Mr. Zdebski's lane of traffic and his car struck it. Following the accident Mr. Zdebski developed pain and went to the emergency department of St. Catharines General Hospital. There, he reported headache, neck and shoulder pain and lower back pain with a shooting pain into his lower left leg. He was prescribed Tylenol 3 for the pain and advised to rest in bed for two days." Mr. Zdebski saw his family doctor, Dr. Petrowski, on December 11, 1992. Dr. Petrowski observed that Mr. Zdebski had full rotation of his neck, with pain at the extremes of the rotation. Mr. Zdebski complained of tenderness in his back but had full straight leg raising with some stiffness in the left hip joint. Dr. Petrowski referred Mr. Zdebski to a comprehensive rehabilitation and work conditioning program at the Canadian Back Institute (CBI) beginning in March 1993 and to an orthopaedic specialist, Dr. Josefchak, who first saw him in March 1993.

Mr. Zdebski maintains that despite his participation in extensive rehabilitative therapy and work conditioning programs, he remains substantially disabled. He attributes his disability primarily to low back pain radiating into his left leg, with associated numbness and weakness, and to a lesser degree, to pain in his neck and shoulder area, particularly on the left side. Mr. Zdebski relies upon the results of the March of Dimes functional abilities assessment, the clinical findings and opinion of Dr. Walter F. Kean, a rheumatologist and professor of medicine at McMaster University, with expertise in the area of chronic pain, as well as the results of a series of X-Rays and a CAT scan taken in July 1994.

Allstate maintains that, following a year of comprehensive therapy and medical investigation, Mr. Zdebski's continuing complaints of disabling pain are no longer credible in relation to the soft tissue injuries he suffered. The Insurer relies upon the opinions of Dr. Josefchak and Dr. E.P. Urovitz, who are both orthopaedic specialists, Dr. E.H. Klimek and Dr. Douglas Newman, who are both neurologists, as well as the results of an MRI scan conducted in November 1993. The Insurer claims that by January 1994, Mr. Zdebski was physically capable of returning to his pre-accident employment. The Insurer submits that in the absence of objective findings of pathology or underlying medical causes to explain Mr. Zdebski's prolonged convalescence, Mr. Zdebski is malingering for personal gain.

Essentially the question of whether Mr. Zdebski remains substantially disabled from returning to his pre-accident employment, rests on the credibility of his pain complaints. The various specialists, who briefly examined Mr. Zdebski on one or two occasions since his accident, have conflicting views whether his complaints of pain are genuine. However, there is unanimity among the treating health care professionals who had an opportunity to observe Mr. Zdebski over longer periods of time, that his pain was both real and disabling.

In May 1993, the CBI reported that Mr. Zdebski co-operated fully throughout its eight week rehabilitation program. He achieved significant improvement in his neck and shoulder area and some improvement of his headaches, though his lower back symptoms worsened. Mr. Zdebski reported difficulty with sustained standing or lifting, and the CBI noted that he was becoming extremely pain focused in the area of his lumbar spine. He exhibited good tolerance for a simulated work experience, doing up to three hours of drywalling per day. The CBI recommended a work hardening program of four hours of regular duties per day gradually increasing over two months with an anticipated complete return to work by August 1993.

In August 1993, Mr. Zdebski was referred to the Ontario March of Dimes for a functional abilities evaluation (FAE). The FAE reported that Mr. Zdebski could tolerate work for up to six hours, at a medium physical demand level. The March of Dimes report noted no problem with prolonged sitting and no apparent problem with cervical mobility but limited tolerance for repeated bending or lifting. The report noted complaints of left lower back pain and left leg numbness. The FAE suggested Mr. Zdebski should be ready to return to his drywalling job after he concluded a 10 week intensive work hardening program.

Mr. Zdebski is reported to have participated conscientiously and co-operatively in the March of Dimes Work Hardening Program ending in September 1993. However, he complained of increasing back pain along with increased numbness in his left leg, as his work hours and work days increased. The medical staff concluded that Mr Zdebski's physical tolerance was declining over the duration of the program, and that it was unlikely Mr. Zdebski would be able to develop the endurance required to meet the physical demands of a drywaller at that time. The March of Dimes program ended early, with a recommendation for further medical investigation to determine the cause of Mr. Zdebski's increasing back pain and left leg numbness.

In each of these programs, Mr. Zdebski is reported to have participated conscientiously and co-operatively and he made real functional gains in his neck and shoulder areas. In my view these factors indicate a genuine effort to rehabilitate. In addition, several of the treatment providers had long and intensive associations with Mr. Zdebski with repeated opportunities to observe him and assess his condition. I conclude that it would be difficult for Mr. Zdebski to sustain a pretence over many weeks, repeatedly deceiving the various rehabilitation specialists concerning the nature and intensity of his pain.

In September 1993, Allstate arranged for Mr. Zdebski to be examined by Dr. Klimek, a specialist in neurology. Dr. Klimek found no evidence of any underlying abnormality or nerve root deficit and suggested that Mr. Zdebski's presentation fell into one of two categories: either he was suffering from an underlying disc herniation, or he was malingering. At that time, Dr. Klimek found that Mr. Zdebski presented in a credible fashion with actual back discomfort and concluded that Mr. Zdebski was likely suffering from an underlying disc bulge or herniation in the lumbar region which was slowing his recovery. Dr. Klimek recommended an MRI scan of the lumbar region.

The Insurer arranged for Mr. Zdebski to be examined by another specialist in neurology, Dr. Douglas Newman, in September 1993. Dr. Newman noted that Mr. Zdebski's problems concerning his upper back and neck seemed to have largely resolved but, he still complained of pain in the lower back area extending into the posterior aspect of his lower left leg. Dr. Newman reported that the results of neurological tests on Mr. Zdebski were all normal, and concluded that Mr. Zdebski had a lumbosacral pain syndrome with no neurological impairment. Dr. Newman suggested that Mr. Zdebski's prolonged convalescence could be due to an underlying structural spinal abnormality, the development of arthritis, or motivated by elements of secondary gain. Dr. Newman suggested that a bone scan might clarify Mr. Zdebski's situation.

An MRI scan was conducted in November 1993. The MRI report noted no evidence of disc herniation, bulge, or spinal stenosis. The bony alignment was reported to be normal and the disc signal and heights were found to be normal/" Allstate terminated benefits to Mr. Zdebski in January 1994,

Dr. Klimek changed his opinion concerning the genuineness of Mr. Zdebski's complaints when he re-examined Mr. Zdebski in February 1994. Dr. Klimek observed no objective findings of back pathology or nerve root compression during his physical examination. He relied on the negative results of the MRI taken in November 1993, in concluding that Mr. Zdebski's continuing disability due to low back pain was not credible. Dr. Klimek expressed the view that Mr. Zdebski was able to return to his former work as a drywall installer.

In April 1994, Mr. Zdebski attempted to return to work. Mr. Kolodziejczyk, of Janusz Contracting Ltd. testified that at some point in 1993 or 1994 (he acknowledged that his recollection was imprecise on the timing of these incidents, which had occurred more than two years earlier) Mr. Zdebski began calling him to inquire about work. In April 1994, Mr. Kolodziejczyk hired Mr. Zdebski to install aluminum cladding on the upper brick walls of an apartment building from a swing stage.^iv He described this work as lifting large aluminum panels, manoeuvring them in the wind, and fastening them to a brick wall. Both Mr. Kolodziejczyk and Mr. Zdebski described this job as physically demanding. I accept their assessment and conclude that this work was similar to Mr. Zdebski's former work as a glazier on the swing stage. Mr. Kolodziejczyk stated that Mr. Zdebski worked two full days in April 1994, however, by the end of the second day, Mr. Kolodziejczyk felt he had to let Mr. Zdebski go. Mr. Kolodziejczyk testified that he is licenced and must supervise the work of his swing stage crew to ensure they do not endanger themselves or others. Over the two days in April 1994, he observed that Mr. Zdebski was sweaty, nervous, and unsteady in his work. Mr. Zdebski complained of being in pain. Mr Kolodziejczyk felt that to allow him to continue working would be too dangerous.

Mr. Zdebski relies upon the opinion of Dr. Kean, a rheumatologist with expertise in the area of chronic pain. Dr. Kean explained that he brings extensive experience and knowledge to his physical examination which helps him distinguish between genuine and feigned responses. In addition, his examination contains certain procedures which assist in detecting a counterfeit response. His experience coupled with Mr. Zdebski's responses to various tests, convinced him that Mr. Zdebski's pain complaints were genuine. Further, Dr. Kean observed several objective symptoms which were supported by the results of a CAT scan taken July 1994.

When Dr. Kean examined Mr. Zdebski in May 1994, approximately 18 months after the accident, he observed a slight scoliosis in the mid-thoracic spine involving Mr. Zdebski's left shoulder anterior and left scapula superior. He noted a very flat thoracic curve, indicative of a problem of the spine. Similar objective symptoms were also noted by the physiotherapist, Ms. Rasmussen, during her examination of Mr. Zdebski in the autumn of 1994.

Dr. Kean testified that an acceleration/de-acceleration (whiplash-type) injury such as described by Mr. Zdebski places a considerable compression load through the cervical spine, most commonly evidenced at the C5-6 levels of the spine. Dr. Kean observed that the July 1994, X-rays and a CAT scan showed evidence of osteoarthritic changes at this level of Mr. Zdebski's cervical spine. Dr. Kean opined that the force of the sudden collision likely resulted in clinical features of post-traumatic osteoarthritis at the C5-6 level of the cervical spine superimposed on possibly pre-existing but asymptomatic osteoarthritis.

The CAT scan also showed mild disc bulges at the L3-4 and L4-5 levels of the lumbar spine with the L-4-5 level disc bulge being slightly to the left. Dr Kean observed that Mr Zdebski's reports of pain and dysfunction in his low back, radiating to the left leg, are in the distribution of a sciatic nerve irritation, with no major motor deficit. Dr. Kean also noted clinical signs of tenderness in the left sciatic notch, a decrease in Mr Zdebski's sensitivity to pin prick in the dorsum and sole of the left foot and a decreased power of dorsiflexion at the left ankle. Dr. Kean stated that these clinical findings were consistent with a stretch injury to the components of the left sciatic nerve. Dr. Kean acknowledged that mild disc bulges such as those shown in Mr. Zdebski's CAT scan do not necessarily result in pain. In this case, however, the slight bulging disc at L4-5 was consistent with Dr. Kean's clinical findings and supported Mr. Zdebski's complaints. Dr. Kean concluded that Mr. Zdebski's injuries prevent him from returning to his heavy work as a drywaller or glazier and may do so permanently.

Allstate submitted that the MRI conducted in November 1993, which showed no abnormalities, is more reliable than the CAT scan of July 1994. Dr. E. P. Urovitz, an orthopaedic surgeon retained by the Insurer, agreed. On the other hand, Dr. Kean commented that both tests are routinely used to diagnose disc or bone abnormalities and results can vary, depending upon the particular view that is taken. I accept that it is quite possible that slight bulges and abnormalities may be missed by either test, depending on various factors. However it is less likely that such abnormalities would appear on a test, if they do not exist. I therefore accept the results of the CAT Scan of July 1994.

Both Dr. Klimek and Dr. Newman suggested that Mr. Zdebski's recovery would be delayed if he was suffering from underlying conditions such as a disc bulge or the development of arthritis. Dr. Klimek ultimately dismissed Mr. Zdebski's complaints of pain on the basis there was no underlying medical cause and no objective findings of substantial pathology to explain the pain. However, neither Dr. Klimek nor Dr. Newman commented on the results of the CAT scan taken July 1994, which showed minor disc bulges at the L-3-4 and L-5 levels of the lumbar spine and osteoarthritic changes at the C5-6 levels of the cervical spine, and may well have affected their opinion concerning the veracity of Mr. Zdebski's complaints of disabling pain and delayed recovery.

Dr. Urovitz dismissed the CAT scan evidence of minor bulges and osteoarthritic changes as insignificant. However, he candidly admitted that patients commonly complain of neck and back pain where no objective signs are present. Furthermore, each of these specialists appears to have ignored the observations of numerous rehabilitation providers who, over long periods of time, consistently noted Mr. Zdebski's complaints of neck and back pain and its disabling effect on him. In contrast, Dr. Kean took these factors into consideration when reaching his opinion concerning the veracity of Mr. Zdebski's pain and its disabling effect. I prefer the opinion of Dr. Kean which is supported by the results of the CAT scan, as well as the observations of numerous rehabilitation providers, assessors, and Mr. Zdebski's former employer, Mr Kolodziejczyk.

Allstate submitted that Mr. Zdebski is inclined to lie for financial gain and maintained that he is exaggerating his pain and feigning disability to receive further weekly income benefits. During his testimony, Mr. Zdebski conceded that the weekly income benefits received from Allstate in the year following his accident were substantially higher than any annual income he had earned from his work as a casual labourer on farms and construction sites, since his arrival in Canada in 1987. Mr. Zdebski also acknowledged that despite earning income in 1991, he filed no income tax return and failed to report some employment income to the Social Services Department while collecting social assistance during the period August 1991 to October 31, 1992. Mr. Zdebski's admission to lying in these other situations, does not, in my view, automatically negate the veracity of his responses upon physical examination and during the course of the various rehabilitation programs. Dr. Kean testified that his examination contains certain procedures which assist in detecting a counterfeit response. I also accept Dr. Kean's evidence that he brings extensive experience and knowledge to his physical examination which helps him distinguish between genuine and feigned responses. I accept the evidence of the various rehabilitation providers and assessors that Mr. Zdebski's progress was impeded by pain despite his full and conscientious participation in various rehabilitation programs. On this basis I conclude that Mr. Zdebski's complaints of pain are genuine and disabling, despite his tendency to lie for financial gain in other situations.

There is general consensus among the medical experts that Mr. Zdebski's medical condition has gradually improved since his motor vehicle accident. Mr. Zdebski concedes that he is ready to return to lighter, less stressful work and has contacted his former employers looking for such work. However, I am satisfied that Mr. Zdebski's low back pain with associated numbness in his left leg, and to a lesser degree the pain in his neck and shoulder area, particularly on the left side, make it difficult and dangerous for him to return to his former work as a drywaller on ladders and scaffolds or as a glazier on a swing stage.

Calculation of weekly income benefits:

Mr. Zdebski claims weekly income benefits based on his income in the four weeks immediately preceding his car accident of December 9, 1992. He claims that he earned a total of $1,733.00 while employed by Janusz Contracting Ltd. from November 12 to November 28, 1992 (2.5 weeks) and $1,218.00.while employed by Majerski Construction during the period November 30 to December 9, 1992 (1.5 weeks). He calculates his weekly income benefits in accordance with sections 12(4) and (7) as follows: gross earnings of $2,951.00 in the four weeks immediately preceding his accident, + 4 weeks = $737.75 per week x 80% = $590.20. Mr. Zdebski makes no deduction for "business expenses which cease as a result of the accident" under section 12(7)3 of the Schedule.

Originally Allstate paid weekly income benefits in the amount of $581.60 based on Mr. Zdebski's statements and two Employer's Confirmation of Income forms, one completed December 23, 1992, by Janusz Kolodziejczyk, as President of Janusz Contracting Ltd.^v and the other completed December 27, 1992 by Adam Majerski.^vi In each of the forms the employer checked off the type of employment as "full-time" rather than "self-employed". In the form, completed by Janusz Contracting Ltd., income was calculated over a seven week period.

Allstate now maintains that there is no reliable evidence to support income from Janusz Contracting Ltd. amounting to $1,733 in the four weeks immediately preceding the accident and that this amount is entirely speculative. Allstate concedes that Mr. Zdebski earned gross income in the amount of $1,218.00 from Majerski Construction but submits that this income and any proven income from Janusz Contracting Ltd. is income from self-employment, and should be treated differently than income from employment under the Schedule.

Income from self-employment is subject to a deduction for "business expenses which cease" pursuant to section 12(7)3 of the Schedule. Allstate proposes that Mr. Zdebski's ceasing expenses ought to be calculated at the rate of 38.5 % of his gross revenue from self-employment and bases its calculation upon the cumulative average of Mr. Zdebski's gross revenue from self-employment, to expenses of self employment, as reflected in his 1989 and 1990 income tax returns. These income tax returns reflect gross revenue less business expenses declared by Mr. Zdebski in connection with his self-employment as a drywall installer, which is similar to the work he performed for Mr. Majerski. However, Allstate's calculation appears to assume that all business expenses claimed by Mr. Zdebski in his 1989 and 1990 income tax returns would qualify as "ceasing expenses" under the Schedule, and would therefore be deductible from his income from self-employment before calculating his gross weekly income. This is not necessarily the case.

Allstate submits that Mr. Zdebski's weekly income benefit should be calculated as follows: $1,218.00 from Majerski Construction, less a deduction of 38.5% for business expenses which cease, leaving a balance of $749.07 + 4 weeks = $187.27 x 80%. On this basis, Allstate maintains that Mr. Zdebski is entitled to the minimum rate of $185.60 per week under section 12(7)1.iii, rather than the $581.60 per week previously paid by Allstate, or the $590.20 weekly amount now claimed by Mr Zdebski.

The Insurer seeks a repayment of the difference between the $581.60 per week paid to Mr. Zdebski during the period December 17, 1992 to January 26, 1994 (58 weeks) and the $185.60 per week that it submits should have been paid, for a total overpayment of $22,968.00. In the alternative, the Insurer proposes that if further weekly income benefits are found owing to Mr. Zdebski, the overpayment of $22,968.00 ought to be applied to offset any amounts found owing.

Employee or self-employed?

The issue of whether income arises from self-employment or employment has been considered in several cases before the Commission decided under the Schedule and the Act.^vii The Ontario Insurance Commission issued a Guideline entitled "Guideline for Identifying Self-Employed Individuals", pursuant to Section 268.3 of the Insurance Act.^viii The Guideline sets out several indicators of self employment in a contract of service situation including, among others:

The individual:

has contract work with no long-term or permanent relationship to a specific purchaser.
is providing the actual services which may be performed at one or more locations for one or more purchasers over the same period of time.
negotiates fees for services provided to the purchaser.
has a business-relationship with a purchaser(s) evidenced by a contract or agreement, either written or oral, express or implied, usually providing some sort of labour.
does not hire any employees.
is ineligible for regular UI benefits
contributes the employer and employee contributions to CPP for his or her own pension plan.
determines the annual income as his or her profit from the business according to the Income Tax Act (Canada) and Income Tax Act (Ontario).

A Guideline takes effect on the date it is published in The Ontario Gazette^ix and must be taken into consideration in any determination involving the interpretation of the Statutory Accident Benefits Schedule. While the Commissioner's Guideline offers assistance in the interpretation of the Schedule, it is not, strictly speaking, binding upon me if the particular facts of this case dictate a different approach.

In this case, both Mr. Janusz Kolodziejczyk, the principal shareholder of Janusz Contracting Ltd. and Mr. Adam Majerski, of Majerski Construction provided evidence concerning their working relationship with Mr. Zdebski prior to his accident.

Mr. Kolodziejczyk testified that although Janusz Contracting Ltd. was incorporated in November 1991, few company records were maintained. There were no employee payroll records, no deductions were made on behalf of employees for Employment Insurance, Canada Pension Plan or income taxes, no attendance records were maintained by the company, and no T4 slips were issued. The assumption was that Mr. Zdebski would make his own contribution to CPP for his pension plan.

Mr. Kolodziejczyk testified that Mr. Zdebski initially started doing small jobs for the company, on an intermittent basis for $10 to $12 per hour, whenever the company was busy. In October 1992, Mr. Zdebski began to work full time hours in connection with a large contract obtained by Janusz Contracting Ltd. to repair and replace the glass on the balconies of five high rise buildings.^x This contract was scheduled to end November 1992. Mr. Zdebski negotiated $14 per hour for this work and also arranged for a portion of his anticipated earnings to be paid in a lump sum, in advance. Mr. Kolodziejczyk testified that the last date Mr. Zdebski worked for Janusz Contracting Ltd. before his accident was November 28, 1992. He gave no evidence of a firm date for Mr. Zdebski's return to work. However, it was clear from Mr. Kolodziejczyk's evidence that he generally relied upon the same pool of experienced workers and would likely have called Mr. Zdebski to work again when his company got busy. It was also clear that Mr. Zdebski was free to accept other work between calls from Janusz Contracting Ltd., and there was no obligation upon Mr. Zdebski to accept further work from the company when it called.

Mr. Zdebski's situation exhibited several of the indicators listed in the Commissioner's Guideline for identifying self-employed individuals. On the basis of the facts before me, I find that there was no long term or permanent contractual relationship between Mr. Zdebski and Janusz Contracting Ltd. which would indicate a formal employer/employee relationship, nor was there any expectation by either party that Janusz Contracting Ltd. would submit contributions to UI or CPP on Mr. Zdebski's behalf. Mr. Zdebski was free to determine his own schedule for accepting or denying work and negotiated the basis for his remuneration, such as a lump sum payment, in advance. The Commissioner's Guideline also states that :

For the purpose 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....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.

Nevertheless, on these facts, I find that Mr. Zdebski was self-employed, despite receiving remuneration from an incorporated business.

Mr. Zdebski's relationship with Majerski Construction was similar. Mr. Majerski testified that his business is not incorporated and everyone who works with him does so on a self-employed, contract-by-contract basis. Mr. Majerski supplies the materials, equipment, and truck, for each contract and usually receives 60% of the contract price while the other worker receives 40%. However, on this contract, Mr. Zdebski negotiated a straight payment of $14 per hour. I accept Mr. Majerski's evidence that he made a mistake when he checked off the box marked "full time employee" in paragraph 3 of the Employer's Confirmation of Income form he completed for Mr. Zdebski.^xi

On these facts, I conclude that Mr. Zdebski was self-employed in a contract of service arrangement with both Janusz Contracting Ltd. and Adam Majerski. Accordingly he must deduct "business expenses which cease as a result of the accident" from his income from self-employment before calculating his gross weekly income as required by section 12(7)3 of the Schedule.

Income from self-employment, less ceasing expenses:

Allstate asserts and I agree, that for the purpose of calculating a person's gross weekly income under section 12(4) and 12(7) of the Schedule, the burden of proving the amount of gross income from employment, less business expenses which cease under section 12(7)3, lies with Mr. Zdebski.^xii Mr. Zdebski relies almost exclusively upon the oral testimony of Mr. Kolodziejczyk and Mr. Majerski to support his calculations for the four week time period immediately preceding his accident.

Mr. Kolodziejczyk testified at length concerning the specific days and hours Mr. Zdebski worked for him during the relevant period. He relied upon sketchy notes, made contemporaneously with events, contained in his journal/calendar.^xiii His best recollection based on these rough notes was that Mr. Zdebski worked approximately 123.5 hours from November 12 to November 28, 1992 inclusive, at a rate of $14 per hour for a total amount owing of $1,729. This total differs somewhat from the information contained in Mr. Kolodziejczyk's Employer's Confirmation of Income form dated December 23, 1992^xiv and in Mr. Kolodziejczyk's affidavit sworn December 29, 1994.^xv In those documents Mr. Kolodziejczyk stated under oath that Mr. Zdebski earned $4,650 over seven weeks from October 12 to November 27, 1992 inclusive. I accept that during his testimony, Mr. Kolodziejczyk reconstructed events which occurred more than two years earlier, to the best of his ability. However, on cross examination, Mr. Kolodziejczyk candidly acknowledged that he could not remember specific dates in detail and that there were difficulties in interpreting his rough journal entries. For example, he generally kept track of the four or five people working on a crew by the initial of their first name. However, from July to November 30, 1992, there were two people named Marek working for him who were switching with one another over that period. Mr. Kolodziejczyk testified that it was not always clear from his notes which individual was being referred to. It is impossible to determine with certainty which hours belong to the Applicant on the basis of Mr. Kolodziejczyk's current recollection and his rough journal entries. However, Mr. Kolodziejczyk stated that his knowledge of who was working for him on particular days and how much he owed them would have been very clear to him closer to the time when the work was performed and he was required to pay them. Mr. Kolodziejczyk completed the Employer's Confirmation of Income form in December 1992, shortly after Mr. Zdebski's last day of work on November 27, 1992. Consequently, I prefer the information contained in that document, prepared when Mr. Kolodziejczyk's memory was still fresh, over his oral testimony. The Employer's Confirmation of Income form states that Mr. Zdebski earned $4,650 over a seven week period for an average gross income of $664.28 per week. Mr. Zdebski worked approximately 2.5 weeks from November 12 to November 27, 1992 for a total gross income of $1,660.71 for that period.

Mr. Kolodziejczyk testified that he provided all the supplies and equipment for the glazier's job. Mr. Zdebski's only expense was to travel from his home in St. Catharines, Ontario to the offices of Janusz Construction Ltd. located in Mississauga, Ontario. Mr. Zdebski testified that it cost him approximately $15 to $20 daily for the round trip to Mississauga, but more when he had to drive himself right into Toronto. Mr. Kolodziejczyk testified that he gave Mr. Zdebski money towards his travel expenses from time to time, but no particulars were provided. Janusz Contracting Ltd. usually transported Mr. Zdebski from Mississauga to the specific work site. I conclude that Mr. Zdebski incurred approximately $240.00 in travel expenses during the 2.5 weeks of work (12 work days x $20.00 per day = $240.00).

The Insurer concedes that Mr. Zdebski earned gross income in the amount of $1,218 from Mr. Majerski during the 1.5 weeks he worked from November 30 to December 9, 1992.

Mr. Majerski testified that he provided the larger and more complicated drills and equipment while Mr. Zdebski brought along his own small tool pouch. Mr. Zdebski's single expense was to drive approximately two kilometres to meet Mr. Majerski at his home in St. Catharines, Ontario. Mr. Majerski then drove him to the various work sites in his truck. I received no other evidence on this point but I am prepared to estimate Mr. Zdebski's expense to be approximately $25 over the 1.5 weeks that Mr. Zdebski worked for Mr. Majerski.

I do not accept the Insurer's submission that Mr. Zdebski's "expenses which cease as a result of the accident" should be calculated at the rate of 38.5 % of his gross income. Expenses of self-employment, as declared for income tax purposes, do not necessarily equate to "ceasing expenses" under the Schedule. For example Mr. Zdebski's expenses of self employment as a self-employed drywaller declared on his 1989 and 1990 income tax returns include repairs and insurance for his truck, home office expenses, tools and equipment. Mr. Zdebski did not file an income tax return for 1991 and did not provide a full tax return for 1992. From the evidence I received, the only relevant expense which ceases is Mr. Zdebski's travel expense which totals $265.00 over the four weeks. I am prepared to deduct this amount from Mr. Zdebski's gross income as follows:

Janusz Contracting Ltd.

$1,660.71

2.5 weeks

Majerski Construction

$1,218.00

1.5 weeks

Gross income

$2,878.71

4.0 weeks

Less: Ceasing expenses

$ 265.00

Weekly income

$2,613.71 ÷ 4 weeks = $653.42 x 80% = $522.74

On the basis of documentation and information supplied to Allstate by Mr. Zdebski, the insurer paid weekly income benefits in the amount of $581.60 from December 17, 1992 to January 26, 1994 (58 weeks) for a total of $33,732.80. The correct amount should have been $522.74 per week for a total of $30,318.92. Therefore, Allstate has overpaid weekly benefits by $3,413.88 and should be credited with this amount against further benefits owing.

Allstate suggested, in passing, that Mr. Zdebski's "business expenses which cease" should include deductions for contributions that he ought to have made to the Canada Pension Plan (CPP) and Unemployment Insurance (UIC). Mr. Zdebski testified that he made no payments to either CPP or UIC from income he earned from Janusz Contracting Ltd. or Mr. Adam Majerski. I must determine whether CPP and UIC ought to be characterized as "business expenses" in the context of a self-employed person and whether they ought to be deducted.

As a self-employed individual, Mr. Zdebski is not required to pay and did not pay any amount for UIC. I therefore reject Allstate's position that such amounts ought to be deducted as a business expense which ceases.

The issue of CPP benefits is more difficult. Every person who receives income from employment or self-employment is mandated by law to contribute to CPP. The amount of the contribution is calculated on the basis of the amount of income earned, subject to certain limits. I accept that CPP contributions made by a company in respect of an employee is an expense of doing business. However, it is not clear to me that CPP payments made by a self-employed person on his/her own behalf qualify. I received no expert accounting evidence or submissions concerning the nature of "business expenses". In my view, a business expense is related to a specific business, and is incurred in anticipation of creating or increasing profits. In contrast, the responsibility to pay CPP only arises after the fact, once income is earned. It is a general liability imposed by law and is unrelated to the specific business activity which generated the income. I therefore reject Allstate's position that CPP ought to be deducted as a business expense which ceases.

Expenses:

Mr. Zdebski seeks an award of the expenses he has incurred in the proceeding, including the expense of a medical report prepared by Dr. Walter F. Kean in the amount of $2,407.50. 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 1 of the Dispute Resolution Practice Code (2nd edition) and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses.

In view of the disparate views of the medical experts involved in Mr. Zdebski's case, and Mr. Zdebski's success, I conclude that he is entitled to his expenses as set out in Schedule 1. However, section 282(11) of the Insurance Act limits an arbitrator's jurisdiction to award expenses to those expenses set out in the regulations within the maximums set out in the regulations. Subsection 5(4) of Schedule 1 of Regulation 664, states that the maximum amount that may be awarded for a report prepared by an expert is $800, if the report is provided to the other parties to an arbitration hearing and is necessary for the conduct of the hearing. Dr. Kean invoiced the Applicant $2,407.50 for his report dated September 8, 1994.^xvi This report was necessary for my decision concerning Mr. Zdebski's ability to return to his pre-accident employment. Allstate is required to pay the allowable maximum of $800 in respect of Dr. Kean's report.

If a dispute arises concerning the specific amount of other expenses to be paid to the Applicant, either party may apply to the Commission for an assessment of expenses in accordance with the provisions of the Dispute Resolution Practice Code.

Order:

Allstate shall pay weekly income benefits in the amount of $522.74 from January 27, 1994 ongoing under section 12(1) of the Schedule.
Mr. Zdebski shall repay Allstate $3,413.88 under section 27(1) of the Schedule. Allstate is entitled to a credit of this amount to reduce the amount of weekly income benefits owing under paragraph 1.
Allstate shall pay interest on the remaining amount owing under paragraph 1, pursuant to section 24(4) of the Schedule.
Allstate shall pay the expenses incurred by Mr. Zdebski in respect of this proceeding as set out in Schedule 1 of the Dispute Resolution Practice Code (August 1995) and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses, including $800 in respect of Dr. Walter F. Kean's report dated September 8, 1994.

July 15, 1997

Janice Mackintosh Arbitrator

Date

ENDNOTES

Appendix A

Present at the Hearing:

Applicant:

Marek Zdebski

Mr. Zdebski's Representative:

Meredith J. Donohue Barrister and Solicitor

Allstate's Representative:

John Soule Barrister and Solicitor

Allstate's Officer:

Douglas Morgan Senior Staff Claims Representative

Translator

Marek Morkowski Polish/English

Witnesses:

Janusz Kolodziejczyk of Janusz Contracting Ltd.

Adam Majerski of Majerski Construction

Grace Rybak - relative of the applicant

Kai Rasmussen - physiotherapist

Dr. Walter F. Kean - Rheumatologist

Ted van Derwal - Manager, Social Assistance Division, Social Services Department

Dr. E.P. Urovitz - Orthopaedic Specialist

Dr. I. Petrowski - Family Physician

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.
The National Occupational Classification (NOC) along with the Canadian Classification and Dictionary of Occupation (CCDO) are the most commonly used vocational work classification systems in Canada. Both the CCDO and the NOC include information regarding the physical requirements of occupations and the physical capacities a worker must have to meet these requirements. The NOC is the more current reference.
Exhibit 3, Tab 11, applicant's "specials brief" - statement of Janusz Kolodziejczyk
Exhibit 5, Tab 15 of Applicant's "Specials" brief - employer's Confirmation of Income Form - Janusz Contracting Ltd. dated December 29, 1992
Exhibit 10, Tab 16 of Applicant's "Specials" brief - Employer's Confirmation of Income Form - Majerski Construction - dated December 27, 1992
Piper and Zurich Insurance Company (December 6, 1993), OIC A-002585; Oliveira and Wellington Insurance Company (April 7, 1997), OIC A96-000010
Commissioner's Guideline No.1/95 published in the April 22, 1995 edition of The Ontario Gazette
Section 268.3(2) and (3) of the Act, as amended by Bill 164
Exhibit 1, Invoices from Janusz Contracting Ltd. to J. S. Consultants
Exhibit 10, Tab 16, Applicant's "specials" brief - Employer's Confirmation of Income Form - Majerski Construction dated December 27, 1992
Philippe and Royal Insurance Company (February 15, 1996), OIC A-006389, upheld on appeal.
Exhibit 2 - 1992 Journal/Calendar maintained by Mr. Janusz Kolodziejczyk
Exhibit 5, Tab 15 of the Applicant's "Specials" brief - Employer's Confirmation of Income Form
Exhibit 4, Tab 7 of the Applicant's "Specials" brief - Affidavit of Janusz Kolodziejczyk
Exhibit 21 - Medical report of Dr. W. Kean dated September 8, 1994
Exhibit 39, Emergency records from St. Catharines General Hospital
Exhibit 23 attachment to Dr. Newman's report dated September 27, 1993

Marek Zdebski v. Allstate Insurance Company of Canada, 1997 ONICDRG 131

Case Summary