Neutral Citation: 1997 ONICDRG 57

OIC A-016039

ONTARIO INSURANCE COMMISSION

BETWEEN:

ELIZABETH A. KELLY

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Elizabeth A. Kelly, was injured in a motor vehicle accident on December 18, 1990. She applied for and received weekly income benefits from Zurich Insurance Company ("Zurich"), pursuant to Ontario Regulation 672,¹ from one week after the accident until October 18, 1994, at the rate of $939.77 per week.

Mrs. Kelly claims that she is entitled to ongoing weekly income benefits after October 18, 1994. Zurich claims that Mrs. Kelly is entitled to a $682 weekly income benefit until December 18, 1993, and that she has been overpaid.

The parties were unable to resolve these disputes through mediation, and Ms. Kelly 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. Kelly entitled to weekly income benefits after December 18, 1994 under section 12(5)b of the Schedule?

2. What is the correct amount of Mrs. Kelly's section 12 weekly income benefit?

3. Did Mrs. Kelly earn post-accident income which Zurich may deduct from Mrs. Kelly's weekly income benefits?

4. Has Zurich overpaid Mrs. Kelly's weekly income benefits?

5. Is Mrs. Kelly entitled to housekeeping, snow removal and yardwork expenses under section 6(1)f of the Schedule?

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

Result:

1. Mrs. Kelly is entitled to weekly income benefits pursuant to section 12(5)b of the Schedule until May 31, 1995.

2. The correct amount of Mrs. Kelly's weekly income benefit is $1,050.

3. Mrs. Kelly earned post-accident income which Zurich may deduct from her weekly income benefits.

4. Zurich has not overpaid Mrs. Kelly's weekly income benefits.

5. Mrs. Kelly is entitled to reimbursement for one-half of her housekeeping expenses through 1995 ($1,059.30), all of her snow removal expenses ($535), and none of the yardwork expenses, pursuant to section 6(1)f of the Schedule.

Hearing:

The hearing was held in Ottawa, Ontario, on February 12, 13, 14, 15, and 16, 1996. I heard final submissions by teleconference on March 8, 1996.

Present at the Hearing:

Applicant:

Elizabeth A. Kelly

Applicant's Representative:

Peter J. E. Cronyn

Barrister and Solicitor

Zurich's Representative:

Donna Crabtree

Barrister and Solicitor

Court Reporter:

Sara Ethier, Gillespie Reporting Service

Arbitrator:

Fred B. Sampliner

Witnesses:

Elizabeth A. Kelly

Applicant

Dr. Lucy Rabb

family physician

Dr. Reda El-Sawy

physiatrist

Terry Kelly

Applicant's son

Donald Ross

certified accountant

Mark Brenning

certified accountant

Exhibits:

The parties filed thirty exhibits.

Evidence and Findings:

The Accident:

On December 18, 1990, Mrs. Elizabeth A. Kelly was struck by an automobile while attempting to cross the street. She was thrown by the impact and landed on the pavement. At the time of the accident, Mrs. Kelly was a 65 year old self-employed real estate broker/salesperson. Mrs. Kelly operated her business under the corporate name, "Elizabeth A. Kelly Realties Ltd." She continued to operate the business after the accident.

Mrs. Kelly was taken by ambulance to the Ottawa Civic Hospital, and treated for a trimalleolar (three point) fracture of the left ankle, and abrasions/contusions on her left hip and shoulder. Dr. Castle, an orthopaedic surgeon, repaired the fractures by attaching the bones with a metal plate and screws. The fractures healed well during Mrs. Kelly's hospitalization, and on January 2, 1991, she was transferred to May Court Convalescent Home. May Court released Mrs. Kelly on May 25, 1991, and thereafter, she received physiotherapy treatment. Mrs. Kelly suffered pain, stiffness and swelling in her left ankle after she left May Court. In September 1992, Dr. Castle surgically removed the plate and screws. Mrs. Kelly returned to May Court for a short time thereafter.

By all accounts Mrs. Kelly's ankle and the left side contusions/abrasions healed well. However, Mrs. Kelly complains of periodic left ankle stiffness and swelling. She developed arthritic symptoms in both her knees. Her left hip and low back are also painful. Mrs. Kelly claims these conditions reduce her strength, stamina and mobility, and that she has been unable to conduct portions of her real estate business.

Parties' Positions on Weekly Income Benefits:

Section 12 of the Schedule provides an insured person with a weekly income benefit if he or she suffers a substantial inability to perform the essential tasks of his or her pre-accident employment as a result of the accident. After the first three years of weekly income benefits, the eligibility test becomes stricter. Section 12(5)b of the Schedule provides that after three years, the insured person must establish that he or she is unable to engage in any employment suitable to his or her education, training or experience.

According to section 12, an insured person calculates the amount of the weekly income benefit by taking 80 percent of his or her average employment or self-employment income for either the four or fifty-two week period before the accident. The parties agree that the maximum weekly income benefit is $1,050 under the Schedule.

Both the entitlement to and quantum of Mrs. Kelly's weekly income benefit are in dispute. She claims ongoing weekly income benefits after the October 18, 1994 termination date. Zurich claims that Mrs. Kelly is not entitled to weekly income benefits after December 18, 1993, the third anniversary of the accident.

Mrs. Kelly claims that the amount of her weekly income benefit is $1,050 per week and that Zurich has underpaid her. Zurich paid Mrs. Kelly $939.77 per week. The company alleges the correct amount is $682 per week.

Zurich claims a repayment based upon the overpayment of quantum and the payment of weekly income benefits after the third anniversary of the accident. Section 27 of the Schedule provides that insured persons who receive payments through error or fraud must repay the insurer.

Background and Education:

Mrs. Kelly was born on May 28, 1925. She married in 1947 and separated from her husband in 1967. She has three adult children from this marriage. She originally completed a grade 12 high school education, but later completed her grade 13 studies while overseas with her husband. She also pursued non-degree courses at the University of Toronto.

Mrs. Kelly has been in real estate sales for approximately 20 years. Her experience in real estate began as a secretary working for lawyers, where she prepared documents for real estate transactions. Mrs. Kelly entered real estate sales in 1967. A few years later, Mrs. Kelly became an independent broker, and she also obtained certification as a property manager. Mrs. Kelly worked the majority of her career in real estate sales.

Mrs. Kelly lives alone in a rural farmhouse in Munster Township outside Ottawa. Her real estate business is essentially a one-person operation. At her home, there is a small separate outbuilding that serves as her home office, and she also has an office in downtown Ottawa. Mrs. Kelly begins her day fielding telephone calls from home, then driving to various appointments to meet clients, goes on errands, or to her office in downtown Ottawa.

Mrs. Kelly's social/recreational interests include cross-country skiing, golf, Celtic dancing, bicycling and gardening. She claims that the injuries have prevented her from participating in these activities.

Suitable Employment:

To determine Mrs. Kelly's eligibility for weekly income benefits under section 12(5)b, her suitability for alternative jobs must first be considered. Mrs. Kelly believes that due to her physical condition and age, only real estate sales is suitable to her training, education and experience. Zurich terminated Mrs. Kelly's weekly income benefits on the basis that she could return to her pre-accident employment. However, the company argues that Mrs. Kelly also has the skills to work at other jobs. Zurich's evidence on this issue is contained in the Access Therapy vocational report dated April 18, 1994 and Mrs. Kelly's own evidence.

The vocational report identifies twenty-four jobs outside of real estate or sales. For example, the report states that Mrs. Kelly is capable of working as a foreign service officer, management seminar leader, employment supervisor, executive secretary, conciliator or as an instructor at a correspondence school. The report concludes: "It is quite apparent that given Mrs. Kelly's significant work experience, that she would be able to transfer into a variety of positions with minimal retraining."

In my view, there is no evidence to suggest that Mrs. Kelly has the education, work experience or training for most of the positions suggested by Zurich. Mrs. Kelly never trained for the foreign service, she has no formal supervisory or management experience, no teaching experience and few modern secretarial skills. The evidence is undisputed that Mrs. Kelly suffered from arthritic hands and wrists prior to the accident, and that she has difficulty with keyboard work. She is not computer literate. Mrs. Kelly's accountant testified that her financial and administrative records are disorganized and poorly maintained. The report's conclusion that she would require minimal retraining for jobs outside of real estate or sales positions does not comport with the evidence.

I accept that Mrs. Kelly's age, arthritic hands and wrists, lack of administrative and clerical skills seriously limit her competitiveness in a workforce redeployment.² Zurich's vocational report fails to address Mrs. Kelly's age, physical limitations, lack of experience, training and practical skills for the jobs outside of her current field.

Zurich's vocational report identifies as suitable the job of a real estate manager. Mrs. Kelly is a certified property manager. She testified that occasionally she collects rents and reviews property conditions for clients. However, the real estate manager described in Zurich's report is required to oversee bidding and new construction and renovation projects, to supervise staff and maintain detailed company records of holdings. No evidence suggests that Mrs. Kelly has experience or skills in these areas.

The position of rental agent is described in the vocational report. Broadly, this position requires the agent to enforce government regulations on landlord/tenant matters. The agent mediates, arbitrates and advises parties concerning rental practices, rights and remedies. Again, no evidence was adduced that Mrs. Kelly has this skill or experience. I find that Mrs. Kelly does not have the education, training or experience for either a rental agent or real estate manager.

Zurich's report cites sales opportunities in marketing hotel and employment agency services. These jobs require visits to prospective customers, identification of their needs, presentation of the services, closing the sale and preparing the paperwork. Mrs. Kelly's evidence suggests that she has similar skills as a real estate salesperson. However, the short job descriptions do not provide the training and physical requirements for these positions.

The evidence is that Mrs. Kelly can walk short distances and is able to climb stairs with difficulty. Based upon the brief job descriptions and Mrs. Kelly's age and physical limitations, I am not prepared to find that these jobs are indeed appropriate.

Initially, Mrs. Kelly has the burden to prove that she is unable to perform any suitable employment.³ Recent decisions by Arbitrators Evans, Manji and Seife have held that the insured person must demonstrate that the jobs are unsuitable,⁴ that, in the absence of total disability, the insured person must make bona fide efforts to identify suitable employment and to present credible evidence that the injuries make them unfit.⁵ I agree with Arbitrator Evans that "an insurer's mere listing of possible jobs is insufficient without further evidence."⁶

In this case, Zurich's listed job descriptions are brief. Most of the proposed jobs are clearly unsuitable to Mrs. Kelly's education, training and experience. Considering that Mrs. Kelly is a 71 year old arthritic woman, who has spent the majority of her working career as a self-employed real estate salesperson, the situation is more complex than providing her with a printout of potential jobs. Under the circumstances, I do not accept it is reasonable for Mrs. Kelly to change her career, and I find that she is a real estate broker/salesperson for the purpose of eligibility under section 12(5)b of the Schedule.

Mrs. Kelly's Pre-Accident Condition:

Mrs. Kelly suffered from arthritic hands and wrists before the accident. She fell and broke her right wrist in March 1988. Her family physician, Dr. Lucy Rabb, sent her to a physiotherapy clinic. Dr. Rabb testified that Mrs. Kelly developed painful bony nodes on her hands, and sent her back for additional physiotherapy. In December 1990, just before the accident, Mrs. Kelly was discharged from the clinic. The discharge summary notes that her pain was no longer constant. Mrs. Kelly took anti-inflammatory medication to relieve the swelling in her joints.

Mrs. Kelly also experienced aches and pains in other parts of her body prior to the accident. Dr. Rabb testified that Mrs. Kelly complained of creaky knee joints for many years before the accident. Dr. Rabb also testified that Mrs. Kelly’s overweight condition (20-40 pounds) might contribute to the development of arthritis. In a health questionnaire that Mrs. Kelly completed during physiotherapy on her hands, she wrote "knees" next to "arthritis." Her self-analysis confirms Dr. Rabb’s testimony that her knees were painful. However, there is no evidence that before the accident, Mrs. Kelly either sought treatment for her knee problem or that her mobility was significantly reduced.

Mrs. Kelly's low back showed degenerative changes before the accident. X-rays taken of her lower spine in 1979 and 1980 show mild degenerative changes. However, records from her physiotherapy treatment just prior to the accident and Dr. Rabb’s clinical notes and records do not indicate that she complained regularly about back or knee pain.

Mrs. Kelly’s arthritic hands reduced her function prior to the accident. Although she testified that she was not restricted by arthritis prior to the accident, the physiotherapy records from March 1989 state that she had difficulty typing documents and cleaning floors. The discharge notes from physiotherapy in December 1990 indicate that Mrs. Kelly was pleased with her improved wrist mobility, but that she continued to experience stiffness, pain and mobility problems. I accept the evidence from the physiotherapy clinic that Mrs. Kelly’s hands were painful and modestly restricted her ability to type and wash floors. However, I find that Mrs. Kelly was functional in work and social life prior to the accident.

Mrs. Kelly's Post-Accident Condition:

Mrs. Kelly’s surgeon, Dr. Castle, did not testify. His reports and clinical records recite Mrs. Kelly's surgical history and provide an overview of her post-accident physiotherapy. Dr. Castle discharged Mrs. Kelly from his care in October 1992. He did not examine Mrs. Kelly again until February 1995, when he conducted a medical/legal assessment at Zurich's request.

In 1995, Dr. Castle reported that Mrs. Kelly complained of left hip discomfort, intermittent low back and left buttock ache, left knee discomfort when bending or with prolonged walking, and swelling in her left ankle after excessive walking. Upon examination, Dr. Castle found no restriction in the mobility of Mrs. Kelly's left hip. Dr. Castle's opinion was that Mrs. Kelly's problems were mild and related to her age rather than the accident.

However, Dr. Castle also found that Mrs. Kelly’s left ankle was 20 percent restricted, as compared to her right ankle. He noted that X-rays of the left ankle bones showed roughness or spurring, that her pelvic bone and trochanter were also spurred, and that she had mild arthritic changes and skeletal thickening. He referred to x-rays of Mrs. Kelly's lumbar spine showing significant hypertrophy (enlargement). Dr. Castle’s report does not explain his objective findings. Dr. Castle was personally critical of Mrs. Kelly. He wrote in bold capital letters, "She can't listen." His report states, "...she was unable or unwilling to grasp the meaning of my explanations to her, she was unable to listen to direct questioning and answers were often totally inappropriate." The hostile tone in Dr. Castle’s report and notes seems to indicate that his personal view of Mrs. Kelly affected his opinion. I reject Dr. Castle's conclusions based upon his failure to adequately explain his objective findings.

In 1995, Mrs. Kelly underwent a CT examination of her lumbar spine. The radiologist reported severe degenerative disease at all levels and moderate spinal stenosis or narrowing at L2/3, L3/4 and L4/5.

Dr. Jacques Bouchard, an orthopaedic surgeon, examined Mrs. Kelly and reviewed the x-rays and CT scan. Mrs. Kelly complained to Dr. Bouchard of pain running from her left buttock/low back to her knee. He essentially agreed with the radiologist's findings. Dr. Bouchard said:

The arthritis in her back and her left knee most likely predate her accident and there is really no way to assess radiologically how her motor vehicle accident influenced the onset of symptoms in the knee, leg and lower back. It does seem, however that she was minimally symptomatic prior to the motor vehicle accident and now has symptoms that are significantly disabling. It is true that she would eventually have developed these symptoms but these may have developed earlier than expected because of the trauma and the rehabilitation involved with this injury.

Dr. Christopher Ellis, another orthopaedic surgeon, also reviewed Mrs. Kelly’s health records in February 1996. He similarly found no clear cut evidence that the accident precipitated Mrs. Kelly’s problems. All the experts agree that the swelling and pain in Mrs. Kelly’s left ankle resulted from the accident.

A physiatrist, Dr. Reda El-Sawy, testified at the hearing. His testimony, reports and clinical notes and records provide a historical analysis of Mrs. Kelly's health problems. Dr. El-Sawy first examined Mrs. Kelly in July 1991 at the request of her family physician, Dr. Rabb. In 1991, Mrs. Kelly’s primary complaint was left buttock and knee pain, with secondary left ankle pain. Dr. El-Sawy diagnosed osteoarthritis of the left knee and implied that Mrs. Kelly may have developed left hip sciatica. I believe it is significant that six months after the accident, Dr. El-Sawy found symptomatic arthritis in Mrs. Kelly's left knee.

In 1995, Dr. El-Sawy examined Mrs. Kelly again. Her left knee pain and swelling was magnified, and radiated into her leg. Mrs. Kelly also experienced right knee pain. At that time, Dr. El-Sawy's report indicates he suspected the knee symptomology resulted from post-traumatic osteoarthritis. Later, after he saw the results of the CT scan, Dr. El-Sawy reported that Mrs. Kelly’s physical condition explained her irritability, aches and pains.

Dr. El-Sawy elaborated upon his views at the hearing. He pointed out that the nurses' notes immediately after the accident indicate Mrs. Kelly had numerous complaints of left leg pain, swelling and discomfort during her first week in hospital. Significantly, Mrs. Kelly's left buttock was bleeding two days after the accident. Dr. El-Sawy is of the view that a 65 year old woman who was hit by an automobile, thrown into the air onto the hard pavement and sustained a bruised bleeding buttock, would probably develop left sciatica. Dr. El-Sawy explained that the same twisting action broke her left ankle bone, twisted her left leg, and caused the pain and swelling described in the nursing notes. According to Dr. El-Sawy, further evidence to support his opinion is contained in the 1995 EMG nerve studies, which show damage to four nerves supplying the muscles of the left leg and knee.

Dr. El-Sawy stated that Mrs. Kelly's right leg symptoms are caused by the accident. The hospital records after the accident indicate that Mrs. Kelly experienced right leg pain, numbness and reduced pin prick sensation. In sum, Dr. El-Sawy testified that Mrs. Kelly's current symptoms are consistent with the mechanics of the injury and the immediate post-accident treatment records.

Dr. El-Sawy presented a balanced and logical analysis of Mrs. Kelly's medical history and symptoms. He concluded that, based upon Mrs. Kelly’s pre-accident x-rays and the mechanics of the injury, her spinal degeneration was not accident-related. Further, he accepted that Mrs. Kelly suffered arthritis before the accident. However, I am convinced by Dr. El-Sawy's analysis of the mechanics and history of the injury that the accident precipitated or was a material contributing factor⁷ in both the development of Mrs. Kelly's left hip sciatica, and the aggravation of the arthritic changes in her knees.

Dr. El-Sawy did not conduct any physical tests to determine Mrs. Kelly's level of disability. Although he testified that she was not capable of working at any job, he did not have information about her tasks. I do not accept Dr. El-Sawy's opinion of Mrs. Kelly's work abilities.

Similarly, Dr. Rabb testified that she could not work. She described Mrs. Kelly as a go-getter, and stated that the accident had a devastating impact on her life. Dr. Rabb identified Mrs. Kelly’s specific disabilities as difficulty with walking on uneven ground, negotiating stairs, and standing or sitting for considerable periods. While Dr. Rabb is of the opinion that Mrs. Kelly is unable to work at any job, she did not test or analyse Mrs. Kelly’s physical work demands. I am not prepared to accept her opinion as to the level of Mrs. Kelly's disability.

Voc-Care Rehabilitation Management ("Voc-Care") tested Mrs. Kelly's abilities at her real estate job in December 1993, the point when the eligibility test changed. This report states that although Mrs. Kelly exerted maximum effort, she could not perform all of the tests. Mrs. Kelly's most significant limitations included: stair climbing, walking, standing and squatting. Mrs. Kelly could stand for between nine and fifteen minutes before feeling dizzy or unstable. Her ability to crouch down and squat was limited to two minutes due to back, knee and hip discomfort. Mrs. Kelly could not reach overhead and below the knee due to dizziness and low back discomfort. She could not walk over uneven ground for more than ten to fifteen minutes or perform heavy lifting. Testing showed that Mrs. Kelly could ascend and descend stairs up to a maximum of two flights, one step at a time. The limitations revealed by Voc-Care’s assessment are consistent with Mrs. Kelly’s complaints.

Voc-Care concluded that Mrs. Kelly would not likely be able to conduct the leg-work of her real estate business during a 12-16 hour day. However, the occupational therapist stated that Mrs. Kelly’s sitting tolerance was sufficient to do her job. Her conclusions read:

It appears that the client is capable of performing the majority of the essential tasks required for her occupation, however to a limited degree. Mrs. Kelly presented as being quite deconditioned, being out of breath after ascending and descending 2 flights of stairs, and after walking 15 minutes. Her overall tolerance and endurance appear to be quite poor. She is therefore unlikely to be physically able to work 12-16 hours/day. With respect to her standing and walking tolerance, it appears that the majority of the client’s limitations stem from discomfort experienced in her left hip.

Voc-Care conducted a two-day evaluation of Mrs. Kelly's abilities. The occupational therapist's report of December 17, 1993 compares Mrs. Kelly’s tested abilities to her job requirements. There is no question that Mrs. Kelly made her best effort during the testing. I accept the findings of Voc-Care concerning Mrs. Kelly’s restrictions. On balance, I find Mrs. Kelly suffered a substantial inability to perform the essential tasks of her employment after December 18, 1993. Unfortunately, after December 1993 the relationship between Voc-Care and Mrs. Kelly deteriorated, and no similar testing was performed. The reports from Voc-Care and Mrs. Kelly’s testimony indicate she became angry and frustrated because of Voc-Care's attempts to place her in other employment.

Mrs. Kelly continued at her job, and was observed by investigators. The surveillance evidence in 1994 confirms some of Mrs. Kelly's restrictions. On April 14, 1994, Mrs. Kelly drives her car and walks during morning errands. At 3:00 p.m., Mrs. Kelly enters her downtown Ottawa office, and she clearly favours her right leg as she quite slowly negotiates each step. This evidence confirms Mrs. Kelly’s contention that she was affected by fatigue and ankle/leg pain towards the late afternoon.

Mrs. Kelly did not know she was being videotaped when she showed her home to investigators on April 27, 1994. She completely bends over to the floor from a standing position. She also lifts a toilet tank lid. As in earlier taped scenes, Mrs. Kelly slowly ascends and descends the basement and second floor stairs. None of these activities occur late in the business day.

A year later, the surveillance evidence is quite different. At 11:00 a.m., on April 27, 1995, Mrs. Kelly uses one leg at a time to ascend the stairs to her office. At 5:00 p.m., on April 27, 1994, she carries two bags from a store and partially bends over to load her car. Again, Mrs. Kelly’s restriction seems related to stair climbing. More importantly though, this evidence indicates she is busy until dinnertime.

Mrs. Kelly engages in late-day business activities during the May 31, 1995 surveillance. At 6:00 p.m. she meets clients and tours a building for about twenty minutes. During the tour, she climbs the stairs to the second floor of the building, conversing with her clients in a business-like manner throughout the meeting.

The May 1995 scenes of Mrs. Kelly demonstrate that she is remarkably active late in the business day. She has no observable restrictions during the evening building tour on May 31, 1995. During all three 1995 observations, Mrs. Kelly is busy until the close of normal business hours. I cannot accept that her activities of May 31, 1995 is unrepresentative or isolated. Although Mrs. Kelly testified that late-day fatigue continues to restrict her activities, she presented no specific medical or other evidence to refute the investigation. Clearly, Mrs. Kelly still has difficulty climbing stairs and walking uneven terrain, but I am not persuaded that after May 31, 1995 she suffered late-day fatigue. Thus, I find that Mrs. Kelly did not suffer a substantial inability to perform the essential tasks of her real estate business after May 31, 1995.

The Amount of Mrs. Kelly's Weekly Income Benefit:

Zurich paid Mrs. Kelly $977.39 a week. The company questioned the amount of the weekly income benefit throughout the payment period. At the hearing, Zurich took the position that Mrs. Kelly is entitled to a $682 weekly income benefit. Whereas, Mrs. Kelly maintains her weekly income benefit is the maximum $1,050.

Under section 12 of the Schedule, a self-employed person may use his or her income for either the four or fifty-two week period before the accident as a basis for calculating the weekly income benefit. After income is determined, a self-employed person must deduct "ceasing expenses." and multiply the adjusted amount by 80 percent to arrive at the weekly income benefit.

Zurich maintains that Mrs. Kelly’s 1990 financial statement is not accurate. The statement indicates Mrs. Kelly earned $84,008 gross income for 1990.

The largest discrepancy involves a $21,000 fee relating to the sale of the Appleton Manors property. The transaction closed in August 1990, and Mrs. Kelly recorded the entire commission at that time. However, Zurich contends that $5,000 was advanced to Mrs. Kelly in 1989. Zurich argues that because the $5,000 was not carried over on the books as an unearned fee in 1990, it was likely paid in 1989, and that Mrs. Kelly cannot include this sum in her 1990 income.

The bank records show that Mrs. Kelly deposited funds from the Appleton Manor transaction to her trust account and documents were signed beginning in February 1990. The evidence is undisputed that a portion of the deposit money was her commission. Mrs. Kelly stated in addition that it is possible she received the $5,000 in 1989, but there is no documentary evidence of this. Without evidence to substantiate Mrs. Kelly's receipt of a fee in 1989, I am not prepared to assume she received monies prior to the February 1990 commencement of the transaction. I find Mrs. Kelly earned $21,000 from the Appleton Manors transaction in 1990.

Zurich maintains that Mrs. Kelly's proof of earnings for two small transactions is insufficient. Mrs. Kelly claims she earned an $825 fee from the "Holman/McLean" sale. Zurich’s accountant could find no financial record of the fee. At the hearing, Mrs. Kelly did not present a trade record sheet for the transaction. Aside from testimony, Mrs. Kelly's sole documentary proof was her handwritten fee summary that she prepared for Zurich in support of her income claim. In the face of Zurich’s request for backup information to document the fee, I find Mrs. Kelly’s self-created summary insufficient. I accept Zurich’s position that the $825 fee for the "Holman/McLean" transaction should not be included in her 1990 income.

The second dispute over a small fee involves Zurich’s contention that Mrs. Kelly earned $257 less than she claimed for the sale of 396 Blake Street. Mrs. Kelly reported a $6,100 fee on her summary. A trade record sheet indicates the same figure. Zurich provided me with no documentation to identify the $257 difference. Without documentary evidence from Zurich, I accept the reported $6,100 fee for the Blake Street transaction.

Both parties accountants agree that Mrs. Kelly neglected to include her commission on the "Kozuchowski" transaction. The trade record sheet indicates the fee was $1,500, and that the deal was co-brokered. I find that the Mrs. Kelly earned a $750 commission from the "Kozuchowski" transaction, and I add this amount to her 1990 income.

Netting out the effect of the above changes, I find Mrs. Kelly's gross 1990 income is $83,183.

Gross income is reduced by direct cost of sales. For example, a person who assembles widgets, should deduct the cost of the product to arrive at an adjusted gross income. I have no accounting opinion on direct cost of sales.

I have reviewed Mrs. Kelly’s 1990 expenses. The income statement shows $725 paid to other brokers and the $8,350 paid for referral fees. These costs directly relate to the particular sales that year. I find $9,075 is Mrs. Kelly’s direct sales cost. I find her adjusted gross income is $74,108.

For self-employed persons, section 12 specifically limits deduction of expenses to those items which cease as a result of the accident. In previous cases, I have held that the term "ceasing expenses" was meant to provide an insured with coverage for some of the continuing operating expenses of his or her business so that the person may resume his or her former occupation.⁸

Mrs. Kelly paid the expenses of operating Elizabeth A. Kelly Realties Ltd. after the accident using her disability benefits from Zurich. She clearly expected the business would return to profitability. The financial records show that while expenses fluctuated, nothing completely ceased. The evidence is that the business as a whole and each expense category continued.

Zurich argues that a percentage of the fixed versus variable expenses should be deducted as ceasing expenses. Nowhere in the Schedule is there any authority for arbitrators to apply this methodology. Equally important, this method would create greater uncertainty in the calculation of ceasing expenses and increase the likelihood of disputes about quantum. Practicality and the plain wording of the section forces me to reject Zurich's position. I find that Mrs. Kelly has no "ceasing expenses" to deduct from her 1990 gross income.

Mrs. Kelly’s weekly income benefit calculation is:

(1990 adjusted gross income) $74,108

X 80% = $1,140.

52 weeks

It is undisputed that the maximum weekly income benefit available to Mrs. Kelly is $1,050.

I find Mrs. Kelly’s weekly income benefit is $1,050.

Post-Accident Income:

Throughout this claim, Zurich knew Mrs. Kelly was operating her business. As I understand it, Zurich did not deduct post-accident income during the currency of the payments. At arbitration Zurich claims that it is entitled to deduct Mrs. Kelly’s post-accident income. The parties dispute the amount of the post-accident income deduction.

Zurich claims that Mrs. Kelly did not record two sales on her 1992 financial statements, and that her GST returns understate her income for the same year. In his evidence, Mrs. Kelly’s accountant admitted he did not have backup information to verify Mrs. Kelly’s 1992 commissions, and that he may have erred in calculating her income for that year. I find Zurich’s accounting evidence more reliable for 1992.

Zurich’s accounting report contains evidence of Mrs. Kelly’s unrecorded 1992 income. The accounting report contains Mrs. Kelly's commission statement for the sale of unit 1705 - 545 St. Laurent Boulevard and letters from the transacting solicitor, dated in 1992. These documents clearly show that Mrs. Kelly earned a $2,850 fee on the transaction. Mrs. Kelly’s handwritten trade sheet and commission statement document another $2,150 she earned in 1992 on the sale of unit 1006 at the same address. Mrs. Kelly presented no evidence to rebut Zurich’s contention that she earned the money or that it was already included with the income listed on her 1992 financial statements. I find that Mrs. Kelly’s 1992 income should be increased to reflect the $5,000 unrecorded income.

Mrs. Kelly's post-accident GST returns differ from her financial statements. In 1992, Mrs. Kelly reported GST sales of $25,691; $1,633 more than is reflected in her financial statement. She claims this error resulted from her confusion in following the instructions on the form. Whatever the cause, Mrs. Kelly did not seriously contest the accuracy of the GST returns. I accept the accuracy of the GST reported sales, and find that Mrs. Kelly earned gross income of $5,875 in 1991; $25,691 plus $5,000 unreported income in 1992; $3,128 in 1993; and $4,625 in 1994. I find that Mrs. Kelly earned total gross revenue of $44,319 between 1991 and 1994.

From this total gross revenue, referral fees and commissions that Mrs. Kelly paid to others must be deducted to arrive at an adjusted gross income for the period from 1991 to 1994. Zurich disputes that Mrs. Kelly paid a $3,240 referral fee to her son in 1992. During testimony, Terry Kelly admitted he was not a real estate sales agent or broker. He denied receiving the money. Neither did Mrs. Kelly produce bank records or a receipt demonstrating this fee was paid to her son. I find no credible evidence to support that Mrs. Kelly paid a referral fee to Terry Kelly in 1992.

As I understand it, the remaining referral fees and commissions Mrs. Kelly paid for 1991 through 1993 are not in dispute. The amounts for 1991, 1992 and 1993 can be found in Schedule 3 of Zurich’s accounting report. Neither accountant, their reports or even Mrs. Kelly’s handwritten expense summary (Ex. 20) mentions referrals or commissions for 1994. In the absence of evidence of 1994 commissions and referral fees, I find that Mrs. Kelly had no direct expenses of sales that year. Leaving out the referral fee related to Terry Kelly, I have deducted $8,639 commissions and referral fees ( as per Ex. 4, Tab 6, Schedule III) from Mrs. Kelly's $44,319 gross post-accident income. As a result, I find that Mrs. Kelly has $35,680 adjusted post-accident income for the period through 1994.

Section 15 of the Schedule provides that 80 percent of post-accident income may be deducted from the weekly income benefit. In Mrs. Kelly’s case, I find that $28,544 is deductible from her weekly income benefits through 1994.

Mrs. Kelly is entitled to weekly income benefits for 231 weeks (from December 25, 1990 through May 31, 1995). She is, therefore, entitled to a total of $242,550 in weekly income benefits during that period (231 weeks x $1,050). The parties agree that Zurich has already paid her $939.77 per week until October 18, 1994 (198 weeks x $939.77= $186,074). The final calculation of weekly income benefits owed to Mrs. Kelly is:

$242,550

total entitlement

deduct

28,544

post-accident income

deduct

186,074

benefits paid

$ 27,932

additional weekly income benefits.

The parties must adjust the above amount owed to reflect Mrs. Kelly’s post-accident income through May 1995, plus any interest calculated pursuant to the Schedule.

Snow Removal, Yard Maintenance, and Housekeeping:

Mrs. Kelly seeks reimbursement for the snow removal, yardwork, and housekeeping expenses, which fall within "other goods and services" under section 6(1)f of the Schedule. In order for an insurer to consider a medical expense, it must be reasonable, and necessary as a result of the accident and authorized by a health practitioner.⁹ Zurich disputes the reasonableness and necessity of the claimed expenses.

Mrs. Kelly has submitted copies of statements from a commercial cleaning company and copies of cheques indicating that she hired and paid professionals to keep her house. The statements show that between June 18, 1992 and July 7, 1992 the cleaner spent six hours each week cleaning Mrs. Kelly's house. The cost of each of the four visits was $96.30, including GST. The remaining 18 visits bill the same daily charges for cleaning in 1994 and 1995. According to Mrs. Kelly's summary of these expenses, the cleaning bills total $2,118.60. The amount is not in dispute.

Zurich submits that these cleaners were performing Mrs. Kelly’s heavier housework before the accident due to her arthritic hands and wrists. Zurich maintains it should not be responsible for any housekeeping claims presented at the hearing.

I heard evidence that Mrs. Kelly suffered a qualitative and quantitative difference in her abilities as a result of the accident due to arthritis in her ankle, knees and hip. I accept that the accident was a major precipitating factor in the development of these problems. Dr. Rabb testified that apart from some dry mopping and sweeping, Mrs. Kelly is unable to perform most housework. However, the evidence is that Mrs. Kelly required some assistance with housework before the accident. The surveillance also demonstrated that she recovered some of her functional abilities by mid-1995. Mrs. Kelly’s return to regular activities and her failure to provide me with pre-accident cleaning time and specific chores, causes me to find that she is entitled to reimbursement for fifty percent of her cleaning bills submitted at the hearing, totalling $1,059.30.

Mrs. Kelly’s cheques and statements from J & J Welding and Fabrication indicate she paid $535 for snow removal services during the winters of 1994/95 and 1995/96. I accept Dr. Rabb's opinion that Mrs. Kelly could not shovel snow due to her weak ankle and knees. I find that she is entitled to reimbursement for the full $535 cost of snow removal.

Mrs. Kelly’s expense summary indicates a $170 claim for yard maintenance during 1994 and 1995. The bills attached to her submissions show a much larger total and dating back to 1992. Evidence was not presented to explain the conflict. I am not satisfied, and make no order with respect to the yardwork claim.

Expenses:

I exercise my discretion to award Mrs. Kelly her expenses of the arbitration process, in accordance with the Dispute Resolution Practice Code.

Order:

1. Zurich shall pay Mrs. Kelly $27,932 less the deduction for her 1995 post-accident earnings, plus interest in accordance with the Schedule.

2. Zurich shall pay Mrs. Kelly $1,059.30 for cleaning, $535 for snow removal, plus interest in accordance with the Schedule.

3. Zurich shall pay Mrs. Kelly her expenses of the arbitration.

March 26, 1997

Fred Sampliner Arbitrator

Date

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. 2Reid and Continental Insurance Company (July 27, 1995), OIC A-006022
3. 3Riley and Pilot Insurance Company (April 15, 1996), OIC A-007940, followed in Maas and State Farm Insurance Company (October 16, 1996), OIC A-015935 and Bigda and Dominion of Canada General Insurance Company (October 23, 1996), OIC A-950890
4. 4Gagnon and Jevco Insurance Company (May 1, 1996), OIC A-015357
5. 5Caruso and Guarantee Insurance Company of North America (May 9, 1996), OIC A-006856; Wigle and Royal Insurance Company of Canada (January 12, 1996), OIC A-012312
6. 6Gagnon, supra
7. 7Flemming and Wawanesa Mutual Insurance Company (April 28, 1992), OIC A-000406; Whitney and Co-operators General Insurance Company (March 31, 1993), OIC A-001005; Edwards and State Farm Mutual Automobile Insurance Company (July 12, 1993), OIC A-001707
8. 8Oliveira and Zurich Insurance Company (April 21, 1995), OIC A-002691; Giosa(s) and Alpina Insurance Company, Limited (November 5, 1996), OIC A-006636
9. 9Plows and Jevco Insurance Company (January 16, 1996), OIC A-000175 and A-000588