Ontario Insurance Commission
Commission des assurances de l’Ontario
Neutral Citation: 1997 ONICDRG 44
Appeal P-003995
OFFICE OF THE DIRECTOR OF ARBITRATIONS
ALLSTATE INSURANCE COMPANY OF CANADA
Appellant
and
FATHIA AHMED
Respondent
Before:
Elisabeth Sachs
Counsel:
James M. Flaherty (for the Allstate Insurance)
Altor Shields (for Fathia Ahmed)
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 allowed. The arbitration order dated May 18, 1994 is rescinded except for paragraph 3 of the order awarding expenses to Ms. Ahmed, which is confirmed.
Ms. Ahmed is entitled to her appeal expenses.
March 11, 1996
Elisabeth Sachs Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND
Fathia Ahmed is the widow of Faud Abdulwahab, who died as the result of a motor vehicle accident on December 25, 1991. Ms. Ahmed applied for and received statutory accident benefits from the appellant, Allstate Insurance Company of Canada ("Allstate") under O.Reg. 672, Statutory Accident Benefits Schedule-Accidents Before January 1, 1994 (the Schedule).
Ms. Ahmed did not receive all the benefits for which she applied and her claim proceeded through the dispute resolution process to arbitration. The arbitrator found that at the time of the accident, Ms. Ahmed was principally dependent for financial support on Mr. Abdulwahab within the meaning of subsection 3(2) of the Schedule, and thus entitled to a death benefit of $10,000 under paragraph 11(1)(c) of the Schedule. The Schedule reads as follows:
3(2)
For the purposes of this Schedule, a person is a dependant of another person if the person is principally dependent for financial support on the other person or the other person's spouse.
11(1)(c)
$10,000 to each of his or her surviving dependants who was a dependant at the time of the accident...
The arbitrator also found Ms. Ahmed was entitled to interest on any outstanding amounts and expenses incurred in the arbitration.
Allstate appeals the decision, claiming that the arbitrator erred in law in her application of the Schedule to the facts found. Allstate submitted it was unreasonable for the arbitrator to find Ms. Ahmed was "principally dependent for financial support" on Mr. Abdulwahab when the evidence was uncontroverted that the family relied exclusively on government or social assistance for its income. Allstate argued it was merely an administrative formality that the monthly cheque was made out in Mr. Abdulwahab's name. Ms. Ahmed maintains the arbitrator's decision is correct, both in law and in fact.
II. ISSUES AND ANALYSIS
Death benefits are available to spouses and dependants under the Schedule.
If an insured person dies as a result of an accident, an amount is first paid to the person's spouse under section 11 of the Schedule. The spouse is entitled to this benefit if he or she meets the definition of "spouse" set out in subsection 224(1) of the Insurance Act, R.S.O. 1990, c. I.8, as amended (the Act). Ms. Ahmed received this amount.
The second part of the death benefits scheme is wholly related to financial dependency, as defined by subsection 3(2) of the Schedule. Under paragraphs 11(1)(c) or 11(2)(c) each of the surviving dependants of the insured person, if any, is entitled to a lump sum amount. To be considered a dependant, a person must meet the definition of "dependant" found in subsection 3(2) of the Schedule, that is the person must be "principally dependent for financial support on the other person [deceased] or the other person's spouse." Ms. Ahmed also claimed this amount, which was denied by Allstate.
Ms. Ahmed qualified for a death benefit as a spouse. The question is whether she also qualified for a benefit as a dependant. Allstate submits that Ms. Ahmed and Mr. Abdulwahab were each dependent on government assistance. Neither was financially dependent on the other.
Evidence was led at the hearing that the administrative arrangements through Metro Toronto Social Services required the designation of a "head of household" for the sole purpose of identifying a payee for the monthly cheque and a name for the family unit. Either spouse could be so designated. Each spouse was considered part of a specific family unit, here consisting of two adults and one child. The amount of monetary assistance was based on the number of persons in that unit.
After her husband's death, Ms. Ahmed could not cash the cheque payable to Mr. Abdulwahab, as she was not the payee. However, she qualified for government assistance as part of a now single parent family unit, and the amount of assistance was calculated accordingly.
Ms. Ahmed argues that the issue is one of financial control, and entitlement to government assistance is not a consideration. She says that once Mr. Abdulwahab received the cheque, he cashed it and controlled the distribution of funds, just as if he were a wage-earner distributing his net earnings among the family members. The arbitrator acknowledged this approach, finding as follows:
While it is true that the ultimate source of the Applicant's income was General Welfare Assistance, the payments were structured in such a manner as to create financial dependency by the Applicant upon her late husband. (Decision, pg.11)
Allstate relies on the analysis in Chevrier et al. v. Zurich Insurance Company [1985] I.L.R. 1-1919 (Dist.Ct.Ont.), [1985] I.L.R. 1-1920 (Ont.C.A.). In that case, a mother and an adult daughter received, in their own names, equal amounts of government assistance. The mother managed the money for her daughter, who was not capable of dealing with it herself. Judge DiSalle held that the legislation, as it then stood (Schedule "C"of the Act), "is designed to provide money to someone who has lost financial support because of the death due to the accident." When her mother was killed in an accident, Ms. Chevrier had not lost her financial support. She was held not to be principally dependent on her mother and, therefore, not entitled to a death benefit. I agree with the arbitrator that the factual situation in this case is distinguishable from that in Chevrier, but the concepts of financial dependency as related to the source of the monetary support and compensation for a loss of financial support, are similar.
In my view, the "control and distribution" argument is not relevant to the determination of financial dependency in these circumstances. As noted above, the scheme of benefits on the death of an insured person is two-fold - one to compensate a person as a spouse, the other to compensate dependants for financial loss. It is the second branch which gives rise to the dispute between the parties. The key, it seems to me, is the source of the money. The money came from a government assistance program, not from income generated by an insured person. It was money to which Ms. Ahmed had an entitlement equal to that of Mr. Abdulwahab and she was just as dependent as he was on this source of funds.
The arbitrator considered it important that Ms. Ahmed could not cash the assistance cheque made out to Mr. Abdulwahab after his death. This is not an issue of financial support, but of banking and estate law. Ms. Ahmed did not lose her entitlement to government assistance or her source of financial support on the death of her husband; she simply had to fulfill the administrative requirements of becoming the "designated head of household". If Ms. Ahmed had initially been listed the head of household (as the evidence established she could have been - the choice was that of the spouses), the amount of the cheques would have been identical and made payable to her instead of Mr. Abdulwahab. Given the reasoning in the arbitral decision, this would have meant Mr. Abdulwahab was financially dependent on Ms. Ahmed and presumably, she would not qualify for the death benefit as a dependant.
In my view, the joint selection by Ms. Ahmed and Mr. Abdulwahab of who was named as head of household should have no impact on the entitlement of either of them to accident benefits. Where both spouses are dependent on government assistance, neither can be said to be principally dependent for financial support on the other.
The arbitrator was troubled by the analysis relating to the source of support, as implying that the children of parents receiving social assistance would not be entitled to benefits on the death of a parent under paragraph 11(1)(c) of the Schedule, since they too would be principally financially dependent on the government. Allstate did pay a benefit for Mr. Abdulwahab's child. Now Allstate claims, on the analysis above, it should not have done so but does not seek repayment. In my view, children are dependants of their parents or legal guardians quite apart from those persons source of income. While they are part of the family unit as minors, they are not in a position to qualify for government assistance on their own, and must look to a parent or guardian. Allstate's decision to pay the benefit for the child was the right one.
III. EXPENSES
Although she was not successful, Ms. Ahmed was required to respond fully in the appeal and to make submissions, which were considered and thoughtful. I exercise my discretion in this case to award her the expenses of the appeal, to be assessed through written submissions by counsel, if the parties are unable to agree.
March 11, 1997
Elisabeth Sachs Director’s Delegate
Date