Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 35

Appeal P-009703

OFFICE OF THE DIRECTOR OF ARBITRATIONS

MUSTAFA A. AGHA

Appellant

and

GENERAL ACCIDENT ASSURANCE COMPANY OF CANADA

Respondent

Before:

Susan Naylor, Director's Delegate

Counsel:

Michael D.R. O'Brien (for Mr. Agha)

T.H. Rachlin (for General Accident)

APPEAL ORDER

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

The appeal is dismissed and the arbitrator's order dated May 31, 1995 is confirmed.
No appeal expenses are awarded.

February 27, 1997

Susan Naylor

Director’s Delegate

Date

REASONS FOR DECISION

I. THE NATURE OF THE APPEAL

Mustafa Agha, who was injured in an automobile accident on September 1, 1993, appeals an arbitration order relating to the amount of his weekly income benefits. In the order dated May 31, 1995, the arbitrator held Mr. Agha was only entitled to the minimum rate of $185.60 a week. Mr. Agha clams he should be paid $600 a week by his insurance company, General Accident Assurance Company of Canada ("General Accident").

The rules for calculating benefits are set out in section 12(7) of the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, R.R.O. 1990., Reg 672, ("Schedule"). Under section 12(4), benefits are based on the lesser of $600 a week or 80 per cent of an applicant's gross weekly income from employment or self-employment.

The calculation of gross weekly income is governed by section 12(7), which states in part:

12(7) The following rules apply to the calculation of gross weekly income:

A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232

......
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.

Mr. Agha was represented at the arbitration hearing and retained a new lawyer for the appeal. Both parties made oral submissions. I was provided with a transcript of the evidence given at the arbitration hearing. The arbitration record also contained several reports prepared by Ms. Debbie Chang, a chartered accountant who examined Mr. Agha's records on behalf of General Accident. Mr. Agha and Ms. Chang testified at the hearing.

II. BACKGROUND

The background to the case is set out in the arbitrator's decision:

Before the accident, Mr. Agha was in the moving business. He was the sole owner of a moving and promotional company called Agha Promotion et Developpement du Quebec Inc., which was incorporated in August 1991. He operated his moving business under several trade names, principally, Discount Movers.

According to his evidence, Mr. Agha hired casual labour to help him with moves, when necessary. His business was mainly a "cash business". He was paid in cash and likewise paid his helpers in cash. Very few expenses were run through a bank account.

The dispute concerned Mr. Agha's income in the four and fifty-two weeks before the accident, and the amount of his expenses, particularly his labour expenses. The difficulty was that Mr. Agha's business records were in very poor shape. The arbitrator found that Mr. Agha had never filed a corporate or personal income tax return, he had never remitted GST or filed a GST return, he made no employment deductions, had no regular accounting books or records relating to the earnings of the business, and had no receipts or invoices for his business expenses. Some documentation was made available: handwritten job orders, bank statements and some returned cheques. Mr. Agha rests his case on these documents, particularly the job order forms.

The arbitrator acknowledged that a lack of business records was not necessarily fatal where the person could put forward a credible explanation to justify his or her position. However, he did not find Mr. Agha's explanation of his earnings to be reliable or credible. He concluded that there was no reasonable basis upon which to calculate Mr. Agha's revenues or expenses and held that his entitlement was therefore limited to the minimum benefit of $185.60.

Mr. Agha takes issue with this conclusion. He argues that the arbitrator applied too high a standard of proof - one approaching certainty rather than the balance of probabilities. It is his position that the arbitrator failed to give sufficient credence to the job orders as evidence of gross revenues.

Mr. Agha argues that, while his business expenses cannot be fixed with any certainty, they could not possibly have exceeded the amount necessary to bring his income, net of ceasing expenses, below an amount sufficient to generate maximum benefits of $600. In his view, the question that the arbitrator should have asked himself was:

Did Mr. Agha establish on the balance of probabilities that the ceasing expenses were less than $43,800?¹

III. ANALYSIS

It is well-established that the onus is on the applicant to provide reliable evidence of his or her pre-accident income, including both gross income and deductible expenses.² However, applicants are not expected to pinpoint the amount precisely. Most business filings do not reflect the periods of time legislated under the Schedule. Moreover, it is recognised that not all applicants have well-organised business records or file income tax returns when they should. That is not the focus of the inquiry. The goal is to come up with a sensible approximation of earnings during the periods in question, based on the evidence. If there is a reasonable basis for concluding that an applicant's income, less ceasing expenses, exceeds the amount required for maximum benefits, then that is all that is needed.

Here, however, the arbitrator found that there was no reasonable basis to gauge Mr. Agha's revenues or expenses, let alone decide that his net income probably exceeded the amount necessary to obtain maximum benefits.

Mr. Agha is essentially re-arguing the case he made at arbitration. It was clear from the commencement of the arbitration that the credibility of Mr. Agha's documentation, especially the job orders, was a central issue. On appeal, Mr. Agha attempted to disentangle the issue of revenues from expenses. In either case, however, the credibility of his testimony was crucial.

A review of the transcript shows that the arbitrator had ample grounds to question whether the job orders represented an accurate picture of Mr. Agha's earnings:

They were handwritten, unnumbered and incomplete. They were produced to General Accident's accountant piecemeal, with no explanation given, as were the bank statements and returned cheques.
The job orders were the only documentary proof of Mr. Agha's labour costs in the moving business. There was reason to believe that they provided an incomplete account of the expenses. The total expense recorded was low, although Mr. Agha was operating two moving vans and most jobs were described as involving heavy pieces, such as pianos, appliances or furniture. On one job order, dated December 3, 1992, which did not record the use of any casual labour, it was written "drivers did not arrive until 8 a.m." and "Stephen stated after the screw-up on Dec. 1, ...if movers were late, move was free", suggesting persons other than Mr. Agha were involved in the move.
The customer information in the job orders was incomplete, making verification more difficult. They contained only the moved-from address, and often just a first name. Mr. Agha did not call any customers or helpers to corroborate the information. He argued that General Accident could have done so. The onus was on Mr. Agha to establish his income and expenses on the balance of probabilities. It was his obligation to prove his claim, including calling such witnesses to corroborate his information as necessary. There was no evidence that he had made any attempt in this regard.
Mr. Agha's own testimony suggested that the job orders did not reflect the full picture. He acknowledged that work he did after the accident was not documented by job orders. His explanation - that he required pre-payment because of the poor state of the market and so did not need documentation - was unconvincing.

In reaching his conclusion, the arbitrator found that Mr. Agha had failed to put forward a "coherent account of his financial affairs" and that his testimony was "inconsistent and confusing", particularly about his expenses. These findings were fully supported on the record.

For example:

Mr. Agha's explanation for carrying on business under a variety of trade names and corporate divisions was puzzling. His testimony about the publishing side of the business was unclear. The deficiencies in Mr. Agha's testimony left open the possibility that he was not being forthcoming about the extent of his business dealings.
The available evidence about Mr. Agha's dealings does not support his contention that he was ignorant about basic legal requirements involved in running a business, a suggestion which was advanced to explain the poor state of his records.
The documentation provided was internally inconsistent. There was no correlation between the dates of the job orders and dates on entries in the bank records. There was no consistency in the total revenue figures in the documents provided. The difference might be explained by the slightly different periods covered or the payment of expenses from cash. However, acceptance of this rested on Mr. Agha's uncorroborated testimony.
There were even greater inconsistencies in the documentation relating to expenses. There were no receipts or proof of payment relating to routine expenses associated with the moving business: gas, oil, truck maintenance and repair costs, or licenses and fees. An unaudited financial statement and a draft corporate tax return had been prepared for Mr. Agha's company for the year ended July 31, 1993. The statement of income clearly understated his expenses. Neither the financial statement nor draft corporate tax return had been filed with Revenue Canada by the time of the hearing. It was open to the arbitrator to conclude that these documents had been prepared principally for the purposes of Mr. Agha's insurance claim.
In particular, Mr. Agha's total automobile costs were recorded to be $1,200, although his evidence was that he paid up to $600-700 a month in gas alone. His wage costs were reported to be $1,162, which he acknowledged omitted his entire labour costs as set out in the job orders. Other expenses were left off the sheet; in fact there was little correlation between the amounts reported and the other evidence.
A review of the transcript reveals a number of other examples of confusing or inconsistent testimony. For example, Mr. Agha's testimony relating to the use of his trucks, and license fees and insurance costs involved, was contradictory. His evidence about wages paid to his wife was vague and his testimony about his involvement in a business listed as Worldwide Printing & Marketing confusing. He obfuscated about his publication "How to invest without money".

The arbitrator took a particular view of the evidence; Mr. Agha disputes that viewpoint. He argues, for instance, that his testimony about expenses was consistent with his initial statement to General Accident. What he is really arguing about is the arbitrator's findings on credibility and the weight the arbitrator attributed to the evidence.

It is well established that it is not the role of an appeals adjudicator to second-guess an arbitrator's factual findings, especially relating to credibility.³ Although I have a transcript of the testimony, the arbitrator had the benefit of observing Mr. Agha and of hearing his testimony first-hand. The case turns on the arbitrator's assessment of the credibility of Mr. Agha's evidence. It is exactly this kind of finding that an appeals adjudicator should be reluctant to disturb.

Mr. Agha is asking that I make a number of assumptions in his favour about his revenues and expenses, assumptions that the arbitrator refused to make. The weight to be given to the evidence was properly addressed by the arbitrator and there are no grounds for me to interfere with his findings. His conclusion that there was no reasonable basis upon which to calculate Mr. Agha's gross weekly income was supported by the evidence. Therefore, the appeal is denied.

IV. EXPENSES

Prior appeal decisions have declined to award an insured his or her appeal expenses where the appeal was based on an objection to the weight the arbitrator gave to the evidence. In my view, this was such a case and an award of expenses is not justified.