Neutral Citation: 1997 ONICDRG 61

OIC A96-000010

ONTARIO INSURANCE COMMISSION

BETWEEN:

JOHN OLIVEIRA

Applicant

and

WELLINGTON INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, John Oliveira, was injured in a motor vehicle accident on March 24, 1995. He applied for and received statutory accident benefits from Wellington Insurance Company ("Wellington"), payable under the Schedule¹ Wellington began paying income replacement benefits of $185 per week on March 31, 1995. The parties agreed that income replacement benefits were payable until August 30, 1996 and not after that date, but disagreed about the amount of benefits payable. The parties were unable to resolve their disputes through mediation and Mr. Oliveira applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. What is the amount of income replacement benefits to which the Applicant is entitled? In order to decide this issue, I must decide:

(a) Is the Applicant employed or self-employed?

(b) If the Applicant was self-employed, should his business expenses during the periods when he was not earning income be considered in calculating his gross income?

(c) What was the Applicant's income from employment or self-employment before the accident?

The Applicant also claims his expenses incurred in the proceeding and claims interest on any amounts owing.

Result:

1. The Applicant is entitled to the further amount of $2,409.53, plus interest. In reaching this conclusion, I make the following findings:

(a) The Applicant is self-employed.

(b) The Applicant's revenue and expenses for the entire period of his self-employment should be recognized over the 22 weeks he earned income from employment between August 15, 1994 and December 24, 1994 and between March 1 and March 24, 1995.

(c) The Applicant's income from self-employment, net of expenses, was $4,724.57. His gross weekly income was $214.75. His net weekly income was $182.79, entitling him to income replacement benefits of $164.51 per week. Accordingly, the Applicant is entitled to the minimum rate of $185 per week. Since that amount has already been paid, no further income replacement benefit is owing. The Applicant is entitled to a further amount of $2,409.53 for his business losses following the accident.

2. The Applicant is entitled to his expenses incurred in the proceeding.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on August 27 and 28, 1996.

Present at the Hearing:

Applicant:

John Oliveira

Mr. Oliveira's

Casey Van Moorlehem

Representative:

Barrister and Solicitor

Peter Bodie

Barrister and Solicitor

Wellington's

Chris Blom

Representative:

Barrister and Solicitor

Wellington's

Josie Pachis

Officer:

Arbitrator:

Nancy Makepeace

Witnesses:

The Applicant testified. Deborah Chiasson, a chartered accountant, testified on behalf of the Insurer.

Exhibits:

Nine exhibits were filed.

The Insurer filed written submissions at the hearing.

Background:

The Applicant, John Oliveira, is a thirty-five-year-old general contractor. He operates his business through a company, Tor-Contractors Inc. ("TCI"), which he incorporated on September 15, 1994, about six months before the accident. He is president and sole shareholder of the company.² His wife is also an officer and director.

At the time of the motor vehicle accident on March 24, 1995, the Applicant was working on a project on W. Avenue, Toronto, which he had begun on the first of March. He had worked on another project in Orillia between October and December 1994, but he had stopped for the winter after Christmas and had not resumed work on this project at the time of the accident. The Applicant forfeited both contracts, as well as a third contract (on D. Avenue, Toronto) after the accident. He has not returned to physical work since the accident, although he continues to operate the company, using subcontractors to replace his own labour.

Was the Applicant employed or self-employed?

The Applicant submitted that he is an employee of TCI and was entitled to a salary of $750 per week, or $15 per hour over a 50-hour week. The Insurer submitted that the Applicant was self-employed through TCI. Because a self-employed person's benefit rate is based on his income net of expenses, the Applicant would be entitled to a much lower level of benefit if I find him to be self-employed.

The Applicant relied on the Commissioner's Guideline for Identifying Self-Employed Individuals³ which states:

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

Section 268.3 of the Insurance Act, under which the Commissioner's Guidelines are issued, states that a guideline "shall be considered" in interpreting the Schedule. Guidelines are not binding on arbitrators.

Arbitrators have consistently stated that in determining whether an applicant is employed or self-employed, it is necessary to consider the substance as well as the form of the applicant's business arrangements. I agree with the statement Arbitrator Janice Mackintosh made in Piper and Zurich Insurance Company:⁴

... the inquiry into the amount of an insured person's pre and post-accident income should go beyond mere form, to examine the substance of each individual's financial situation within the overall pre-accident context. The existence of a corporate structure and the issuance of a T4 statement by that company does not preclude further inquiry into the income of an insured person. This is especially true where a small, closely-held corporation is run by a sole or majority shareholder whose activities generate all or most of the revenue and expenses of the company. In such cases, it may be an easy matter to ignore the corporate structure and attribute the income, expenses, and ceasing expenses of the corporation directly to the activities of the insured person, to reach an accurate assessment of the weekly income benefits payable.

Arbitrator Mackintosh found that the Applicant was an employee of the corporation in fact as well as in form, based mainly on her finding that the Applicant had established a consistent and long-standing practice of drawing a regular weekly salary (for which the company issued a T4 statement). On appeal, the Arbitrator's approach was approved by the Director of Arbitrations.⁵

In this case, I find that the Applicant is self-employed, considering his description of his financial arrangements, how he was remunerated, and how TCI's business decisions were made.

The Applicant's description of his financial arrangements

The Applicant described himself as self-employed in a signed statement made before an adjuster on April 6, 1996. I accept the Applicant's testimony that at the time he did not understand the legal difference between an employee and a self-employed person and used the term "self-employed" in a non-technical sense meaning that he did not work for anyone else. However, he also told the adjuster that the company "does not have any employees." These statements indicate that the Applicant considered himself self-employed through TCI, his alter ego. I received no evidence that he ever described himself as an employee of TCI in any context before the commencement of this proceeding.

Remuneration

The contract for the W. Avenue project on which the Applicant was working at the time of the accident set out a contract price of $18,450, inclusive of all taxes except GST. The Applicant explained that TCI, as the general contractor on the project, would receive an administration fee of 10 per cent ($1,845) on completion of the project, subject to holdback. Since the project was not completed, this amount was never paid. The Applicant also testified that TCI would pay his wages - $15 an hour, or $750 a week, based on a 50-hour week - out of the weekly payments received from Grand-Tek Metals ("GTM"), which the contract described as the "hirer."

The Applicant's time sheets for this project indicate that he worked 26 hours the first week (ending March 11), 32 hours the second week (ending March 18) and 44.5 hours the last week⁶(ending March 25). GTM paid TCI based on the Applicant's reported hours at a rate of $15 an hour, plus GST.⁷ These cheques were deposited into the corporate account. TCI issued no cheques to the Applicant during March.

I do not accept the Applicant's submission that these arrangements indicate that he is an employee of TCI. Several factors in this case suggest that the Applicant had an employment-like relationship with Grand-Tek Metals ("GTM"), the company with which TCI contracted and which paid the Applicant. As GTM was the only company for which TCI contracted, the Applicant and TCI were economically dependent on GTM. It was GTM, not TCI, that entered into contracts with the owners of the three properties TCI agreed to renovate. The Applicant completed a GTM time sheet each week, setting out for each day, the name of the job, the time work started and stopped, the hours worked per day and week, and whether the work was done at the GTM shop or on site. The cheques received by the Applicant and TCI corresponded to the time sheets submitted.⁸

However, GTM did not make the payroll deductions required of employers from its cheques to TCI and the Applicant. In response to my question at the hearing, the Applicant's counsel stated that the Applicant did not consider himself an employee of GTM. Accordingly, I make no finding on this point. However, the relationship between the Applicant and GTM undermines the Applicant's submission that he was an employee of TCI.

GTM also appears to have had some difficulty distinguishing between the Applicant and his company. Of the 28 cheques issued by GTM between August 16, 1994 and May 19, 1995, 15 are made payable to the Applicant personally, including 10 cheques drafted after the date of incorporation, while 13 are payable to TCI. The Applicant testified that he deposited all the cheques, whether payable to TCI or himself personally, into the company's corporate account, from which he then drew funds.

TCI's Income and Expense Summary for its first fiscal year (October 1, 1994-September 30, 1995) indicates that the Applicant did not draw a regular salary from TCI, but made irregular "draws": $1,400 in each of October and November 1994, $1,200 in December 1994, $580 in January 1995, $730 in February 1995, and nothing in March (the month of the accident). In his testimony, the Applicant confirmed that he drew what the company could afford after expenses were paid out of revenue. Moreover, the 15 TCI cheques issued to the Applicant between October 1994 and the date of the accident are for various amounts; not one is for $750 or can be explained on the basis of a $15 hourly wage. This pattern of remuneration distinguishes this case from the Piper decision, described earlier.

The Income and Expense Summary also confirms that no deductions were made from GTM's cheques for income tax, Canada Pension Plan, or Unemployment Insurance. TCI issued no T4 slips and did not deduct income tax at source for remittance to Revenue Canada, although a remittance account and T4 account were opened on January 24, 1995. TCI's 1994 income tax return does not report remuneration paid or payable to the Applicant. Nor did the Applicant report any employment income on his 1994 income tax return.⁹

The Income and Expense Summary also indicates that an amount of $367.01 was allocated for GST from the shareholder "draws" of $5,610 during the company's first fiscal year. TCI claimed an input credit for this amount in its GST return for its first fiscal year, which was dated November 22, 1995, about eight months after the accident. As GST is not payable on wages, this indicates that TCI continued to treat the Applicant as a shareholder rather than an employee, even after the accident.¹⁰

TCI's General Ledger Journal Report indicates that an accrued salary of $18,900 was payable to the Applicant by September 30, 1995.¹¹ Ms. Debra Chiasson, the chartered accountant retained by the Insurer, testified that TCI was in no position to pay this amount and indeed was in a loss position even without paying it. She also testified that the Income Tax Act would require TCI to reverse this expense if the salary were not actually paid by March 31, 1996. It was not paid. The Applicant testified that this amount was based on a notional salary of $750 a week. He admitted that he never actually received $750 a week, that there were no documents confirming this salary, and that the company could not afford to pay him that much. The Applicant testified that TCI had not submitted a 1995 corporate tax return pending the outcome of this proceeding. I am not satisfied that the Applicant had any realistic prospect or intention of collecting this "accrued salary" from the company in the foreseeable future. He undoubtedly hoped TCI would be more profitable in the future, but he admitted that the company could not make such a payout at any time in its history to date.

Corporate decision-making

The Applicant is TCI's president and sole shareholder. Although his wife is an officer and director, the Applicant testified that her contribution is limited to doing some bookkeeping and administrative tasks, for which she is not remunerated. The company has never had employees, and although the Applicant testified that he could subcontract his work, I heard no evidence that he ever did so before the accident. The Applicant testified that he solicits work for the company, negotiates a contract price, and makes all the company's decisions, including whether to accept a contract and how and when to do the work. He also testified that he decided on a wage rate of $15 per hour on the W. Avenue and Orillia projects, not on the basis of the value of his work, which he felt called for a much higher wage, but in order to attract more customers during the initial phase of the business. He expected to be able to raise his rates after establishing himself in the market. This is typical of how a self-employed person determines the price he will charge for his services; employees' wages, in contrast, are generally set unilaterally by the employer, or bilaterally through a process of negotiation that only indirectly refers to market conditions.

Profit or Loss

The Applicant's testimony about his reasons for setting a wage rate of $15 per hour also indicates that his goal was to establish a business which would eventually be profitable. Again, this is characteristic of a self-employment situation rather than employment. Employees do not generally benefit from the employer's profits (in the absence of negotiated profit-sharing provisions).

Nor are employees personally liable for the losses and liabilities of the employer. The Applicant testified that he incorporated, on the advice of his accountant, in order to protect his personal assets in what the Applicant described as a very litigious business. Although there is nothing illegal or improper in choosing a form of business which will maximize profit and minimize tax and other liabilities, the Applicant's candid admission that he had no other reason for incorporating suggests that he was essentially self-employed.

Extrapolation of Income:

The Schedule gives insured persons who were employed at the time of the accident the choice of basing their benefits on their income in the 4 weeks, 52 weeks or 156 weeks before the accident, whichever is most advantageous. Self-employed insureds have only the latter two options.¹² The Applicant chose to have his benefits based on his income in the 52 weeks before the March 24, 1995 accident.

The Applicant started his business in August 1994, about seven months before the accident. He incorporated on September 15, 1994, and began working on the Orillia project on October 1, 1994. Work stopped for the winter after Christmas, and TCI received no further revenue until March, about three and a half weeks before the accident, when the Applicant began working on the W. Avenue project. However, TCI continued to incur expenses during this period.

Section 9(3) of the Schedule is as follows:

For the purposes of subsection 1, a person who,

(a) is entitled to weekly income replacement benefits under paragraph 1 of subsection 7 (1);

(b) designated the fifty-two weeks before the accident under paragraph 2 of subsection 7(2);

(c) was self-employed at the time of the accident; and

(d) started the self-employment in which he or she was engaged at the time of the accident during the fifty-two weeks before the accident, may elect that the person's gross income from employment for the fifty-two weeks before the accident be deemed to be the amount determined by taking the person's income from the self-employment in which he or she was engaged at the time of accident for the part of the fifty-two-week period for which the person earned income from that employment and extrapolating it over the rest of the fifty-two-week period.

The parties agreed that the Applicant satisfies the four qualifying requirements set out in clauses (a) through (d) of section 9(3). They also agreed that section 9(3) allows the Applicant to average his pre-accident income from self-employment over the number of weeks "for which [he] earned income," rather than over the entire 52 week "window" set out in section 7(2)2. The parties also agreed that the Applicant started his business on August 1, 1994, 33.714 weeks before the accident, and that he worked through TCI for 17.858 weeks during that period - between September 15, 1994 and December 24, 1994 and between March 1 and March 24, 1995. Accordingly, there was agreement that the Applicant may exclude the period between March 24, 1994 and July 31, 1994, when he was unemployed, in calculating his gross annual income. Finally, although there was some dispute initially about the revenue and expense figures on the basis of which the Applicant's net weekly income should be calculated, at the hearing, the Applicant substantially accepted the figures generated by the Insurer's accountant.

The parties disagreed about how to deal with the startup period (between August 1 and September 15, 1994) and the seasonal layoff (January and February 1995).

The Applicant's initial position was that his benefit should be based on his revenue and expenses in March 1995, extrapolated over 52 weeks, on the basis that he was unemployed in January and February 1995, and without considering his income in the fall of 1994.

I do not accept that section 9(3) allows a self-employed insured who "earned income" for a total of about four months in the 52 weeks before the accident to extrapolate his gross annual income from the three or four weeks immediately before the accident. This would nullify section 7(3) of the Schedule, which states that a person who was self-employed "at any time during the four weeks before the accident shall not designate the four-week period" set out in section 7(2), but must designate either the 156 weeks before the accident or the 52 weeks before the accident. Accordingly, I need not consider this option any further.

Alternatively, the Applicant submitted that he should be treated as having "earned income" for only the 17.858 weeks he worked through TCI (September 15-December 24, 1994 and March 1-24, 1995), and his income should be calculated on the basis of TCI's revenue and expenses during that period.

The Insurer submitted that the Applicant should be treated as having "earned income" for the entire 33.714 weeks between August 1, 1994 and March 24, 1995, when the accident occurred. The Applicant's income should be calculated on the basis of TCI's revenue and expenses over 33.714 weeks. The calculation was set out under the subheading "Scenario II" in Ms. Chiasson's August 23, 1996 report. It would result in a gross weekly income of $140.14, a net weekly income of $134.02, and an income replacement benefit at the minimum rate of $185.60 per week pursuant to section 10(2) of the Schedule. This is the basis on which the Applicant's benefits have been paid.

The plain words of section 9(3) allow a self-employed person to extrapolate his "income from the self-employment in which he was engaged at the time of the accident for the part of the fifty-two-week period for which the person earned income from that employment" over the rest of the 52 week period [emphasis added]. Pursuant to section 83 of the Schedule, a self-employed person's income is to be determined in the same manner as the person's profit from the business would be determined under federal and provincial income tax legislation (with three exceptions that are not in issue in this proceeding).

The Insurer submitted that section 83 requires the inclusion of the Applicant's startup period and seasonal layoff because these periods would be included in calculating the income of the business for income tax purposes. I disagree. Income tax legislation also requires the Applicant to include in his business income calculation the period between March 24, 1994 and August 1, 1994. The Insurer concedes that the Applicant is entitled to exclude that period from the calculation under section 9(3). In my view, section 83 addresses the calculation of income, whereas section 9(3) deals with the calculation of gross annual income "for the purpose of determining the amount of a person's weekly income replacement benefit."

The Insurer also submitted that the method of calculating the Applicant's benefits should take into account that startup costs are a normal part of the business cycle, and seasonal layoffs are normal in the construction industry. The Insurer relied on my earlier decision in Singh¹³ where I held that the self-employed applicant's vacation break should be taken into account in calculating his income because vacations are a regular interruption in work for which both employed and self-employed persons are assumed to allocate income. The Singh decision was one of a number of arbitration decisions dealing with the income averaging (or extrapolation) question under section 12 of the previous Statutory Accident Benefits Schedule, which was silent on the issue.¹⁴ The present Schedule is not silent on the issue, but expressly allows extrapolation over periods of unemployment.

Although the argument was not put to me in the hearing, I considered whether section 9(3)(d) means that an insured person can only use the extrapolation provision to exclude the period before he or she started the self-employment, but once started, cannot extrapolate over any subsequent period of unemployment. However, no such restriction is found in section 9(3). In my view, clauses (a) through (d) indicate who qualifies to make use of the extrapolation provision that follows, and do not restrict the scope of that provision.

Section 9(3) says that a self-employed person may take his "income from the self-employment in which he was engaged at the time of the accident for the part of the 52-week period for which the person earned income from that employment." This clause distinguishes between self-employment and earning income from self-employment and implies that a person may be self-employed but not earning income from that self-employment. In my view, the plain words of section 9(3) form a complete response to Ms. Chiasson's stated opinion that a self-employed person cannot be unemployed because slack periods are part of self-employment. That may be so from an accounting or tax perspective. For the purposes of the Statutory Accident Benefits Schedule, the governing principle is set out in section 9(3), which clearly contemplates that a self-employed person may exclude periods in which he did not "earn income from ... employment" from calculation of his gross annual income.

Accordingly, I find that the issue before me under section 9(3) is: for what period did the Applicant earn income from self-employment?

The main focus of both parties was the seasonal layoff during January and February 1995. The Insurer relied on TCI's Income and Expense Summary, which indicates that while TCI earned no revenue during these months, the Applicant drew $580 from the corporate account in January and $730 in February. TCI also incurred other ongoing expenses during this period, including operating and vehicle expenses, and the purchase of a computer.¹⁵

The problem of determining whether a self-employed person is self-employed or unemployed generally arises in arbitration proceedings where an insured person claims that he is entitled to a higher rate of benefit because he was starting up a business at the time of the accident, though he had yet to earn any income from it. Arbitrators have consistently held, as Arbitrator Joyce Miller stated in Palumbo,¹⁶ that "[I]t is not always necessary for a person to actually be working in his business in order to be found self-employed." In the Palumbo case, the applicant, who had operated a publishing business with his wife, had stopped working when she died about eight months before the accident. At the time of the accident, he was beginning to think about returning to the business, but had not yet done so. Arbitrator Miller followed the principle set out in Sharma¹⁷ that an arbitrator must consider both objective and subjective factors to determine whether a person is employed. In Palumbo, Arbitrator Miller found there was only a subjective intention on the applicant's part to return to work. Arbitrators have reached the same conclusion where the applicant's only business activity during the relevant period was preparing a business card,¹⁸ obtaining a vendor's permit and business licence, applying for a vending zone permit,¹⁹ or renting premises and purchasing equipment.²⁰

In this case, the Applicant signed a tender agreement with respect to the D. Avenue project on February 20, 1995. He also testified that on the advice of his accountant, he had decided to deal with setting up remittance accounts during the winter, so that he would be ready to begin work in the spring. Based on these indicia, I find that in January and February 1995, the Applicant continued to consider himself self-employed through TCI, and he carried on with the planning and administration part of the business, with the intention of taking on more projects in the spring.

However, whether the Applicant was self-employed in January and February 1995 is not the test set out in section 9(3). As stated above, section 9(3) requires me to identify "the part of the fifty-two-week period for which [the Applicant] earned income from ... employment." In January and February 1995, the Applicant was unable to work because of the weather. TCI's Income and Expense Summary confirms that the company received no revenue during those two months. With respect to the Applicant's "draws" from the corporate fund in January and February, they lack the key feature of income from employment - an exchange of remuneration for services. I find that neither the Applicant nor his corporate alter-ego "earned income from employment" in January and February 1995. Accordingly, this period should be excluded from the calculation of the Applicant's gross weekly income.

I heard less evidence about the Applicant's activities in starting up the business in August 1994. The company was incorporated on September 15, 1994, and its first fiscal year started on October 1, 1994. The Applicant's work orders and bank deposit slips show that he completed at least four smaller jobs between September 15 and October 1, when work began on the Orillia project.²¹

The Applicant's GTM time sheets indicate that he worked full time or close to full time from August 15, 1994,²² and regular GTM cheques were issued to the Applicant beginning August 15, 1994.²³ Given my finding that the Applicant was self-employed, it makes no difference that he had not incorporated at that time. Based on this evidence, I find that the Applicant began earning income from employment on August 15, 1994.

The only evidence about the period between August 1 and August 15, 1994 was TCI's 1994 financial statement, which covered the period August 1- September 30, 1994. I heard no evidence that the Applicant or TCI earned income during that period. I am not satisfied that the Applicant earned income from employment before August 15, 1994.

Accordingly, I find that the Applicant was self-employed between August 15, 1994 and December 24, 1994 and between March 1 and March 24, 1995, a period of 22 weeks.

The remaining issue is whether expenses incurred by the Applicant or TCI between August 1, 1994 and August 15, 1994 and between December 25, 1994 and February 28, 1995 are to be considered in calculating the Applicant's gross annual income. The Applicant submitted that expenses incurred when he was not earning income from employment should be excluded from the calculation. The Insurer's alternative submission was that TCI's revenue and expenses for the entire period of 33.714 weeks should be averaged over the weeks when the income was actually earned.

I agree with the Insurer's approach. It is consistent with section 83, which requires a self-employed person's income to be calculated in the same manner as business income under income tax legislation. The income tax acts clearly require consideration of all of TCI's revenue and expenses in the 52 weeks before the accident. After determining the Applicant's income, section 9(3) requires me to determine for what part of the 52 weeks the Applicant earned the income. That is a separate question. Accordingly, the Applicant's income, net of expenses, should be averaged over 22 weeks.

Calculation of the Applicant's Income Replacement Benefit Rate:

Ms. Chiasson testified that TCI's revenue between August 1, 1994²⁴ and March 24, 1995 totalled $15,068.57; she calculated TCI's total expenses as $10,344. As the Applicant did not dispute these figures, I accept them. The Applicant's gross income (net of expenses) was $4,724.57, earned over 22 weeks.

Accordingly, I find that the Applicant's gross weekly income was $214.75. His net was $182.79, based on the Net Weekly Income Table - Self-Employment (November 25, 1993), pursuant to section 82(1)(b) of the Schedule. Accordingly, he is entitled to income replacement benefits at the minimum rate of $185 per week, under section 10(2) of the Schedule. This is the rate at which he has been paid.

After the accident, the Applicant continued to operate the business, but he incurred losses because he was forced to hire subcontractors to do the work he could no longer do. The Insurer conceded at the hearing that the Applicant is entitled to an additional amount under subsections 10(7) and (8) for his post-accident business losses. According to Ms. Chiasson's calculations, the Applicant is entitled to $2,409.53 for his losses to June 30, 1996.²⁵ I heard no evidence about any losses between June 30, 1996 and August 30, 1996, when the parties agreed the claim terminates.

Expenses:

Although I was not satisfied that he is entitled to more than the minimum benefit of $185 per week, the Applicant raised a novel issue and was partially successful in challenging the Insurer's method of calculating his income replacement benefits. I find this an appropriate case in which to exercise my discretion to award the Applicant his expenses incurred in the proceeding.

The Insurer submitted that expenses should be denied because documents were produced during the hearing which could have been produced earlier, and because the Applicant failed to call an accountant, but accepted Ms. Chiasson's figures. Mr. Blom stated that the proceeding might have settled if productions had been made earlier. Based on my review of the record in these proceedings, I am not satisfied that the Applicant's conduct of the matter was such as to merit denying his expenses. In any event, as this hearing was completed before the promulgation of the amended Expenses Regulation concerning settlement offers, I find I have no jurisdiction to consider what settlements could or should have been made. The Applicant is entitled to his expenses.

Order:

1. The Insurer shall pay the Applicant $2,409.53, plus interest pursuant to section 68 of the Schedule.

2. The Insurer shall reimburse the Applicant for his arbitration expenses incurred, subject to Regulation 664, R.R.O. 1990. I may be spoken to in the event of any dispute between the parties about the amount payable.

April 7, 1997

Nancy Makepeace

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after January 1, 1994, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94 and 781/94.
2. 21096707 Ontario Inc.
3. 3Commissioner's Guideline for Identifying Self-Employed Individuals, No. 1/95, April 25, 195, as amended May 13, 1995.
4. 4(December 6, 1993), OIC A-002585 (confirmed on appeal - May 1, 1996).
5. 5See also Moxon and State Farm Insurance Company (July 18, 1991), OIC A-000090, Meandro and Pilot Insurance Company (June 7, 1994), OIC A-004433, Rocca and GANInsurance Company (May 29, 1996), OIC A95-000106, Croke and Wawanesa Insurance Company (August 11, 1994), OIC A-003632 (confirmed on appeal - October 11, 1996).
6. 6Exhibit 1, tab 6.
7. 7Exhibit 1, tab 12.
8. 8Exhibit 1, tab 6.
9. 9Exhibit 1, tab 13.
10. 10Exhibit 1, tab 10.
11. 11Exhibit 1, tabs 9 and 11.
12. 12Section 7(2) and (3) of the Schedule.
13. 13Singh and Wellington Insurance Company, (June 24, 1994), OIC A-00139
14. 14The two main approaches to the issue were set out in Scavuzzo and Canadian Home Assurance Company (March 18, 1992), OIC A-000626 (upheld on appeal) and Vo and Maplex Insurance Company (October 4, 1993) OIC A-002777 (under appeal). In Scavuzzo, Senior Arbitrator Susan Naylor found that section 12 allowed an insured person to extrapolate his income from employment over his periods of unemployment. In Vo, Arbitrator David Draper held that an insured person cannot extrapolate, but must average his income over 4 weeks or 52 weeks, depending on which "window" he or she elects. Arbitration decisions and decisions of the courts have generally adopted the approach taken in Vo.
15. 15Income and Expense Summary, Exhibit 1, tab 11.
16. 16Palumbo and Dominion of Canada General Insurance Company (April 13, 1995), OIC A-007314 (confirmed on appeal - May 24, 1996).
17. 17Sharma and Co-operators General Insurance Company (February 7, 1994), OIC A-003840.
18. 18Opatowski and General Accident Insurance Company (November 20, 1995), OIC A-013992.
19. 19Jambor and Dominion of Canada General Insurance Company (August 14, 1995), OIC A-003703 (confirmed on appeal - May 1, 1996)
20. 20Weatherhead and Jevco Insurance Company (December 23, 1996), OIC A96-000069. See also: Kasap and Allstate Insurance Company (August 2, 1996), OIC A-012020, in which Arbitrator William Renahan stated: "At what stage a person's status becomes one of self-employed is a question of fact. Planning a business, by itself, may not amount to self-employment." Though the Applicant had not received any orders and was still in the planning and development stage of his planned jewellery business, Arbitrator Renahan found that he was self-employed, because he had worked off and on for an uncle in the same business, incorporated his own business, purchased some equipment and supplies, and begun to look for customers. See also the recent appeal decision of Director's Delegate Susan Naylor: Joyce and Co-operators General Insurance Company (March 4, 1997), P96-000014.
21. 21Exhibit 1, tabs 1 and 3.
22. 22Exhibit 1, tab 6.
23. 23Exhibit 1, tab 12.
24. 24Although the chart on p. 5 of Ms. Chiasson's report does not indicate the date of "inception," her figures were based on TCI's 1994 financial statement, which dealt with the period between August 1 and September 30, 1994.
25. 25Ms. Chiasson's figures actually came to $2,409.84, but $2,409.53 seems to be the correct figure, based on a loss of $818.31 for March-September 1995, a loss of $526.58 for October-December 1995, income of $3,551.42 for January-March 1996, and income of $203 for April-June, 1996.