Neutral Citation: 1998 ONFSCDRS 30

FSCO A96-001466

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DAVID MCANGUS

Applicant

and

GUARDIAN INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant, Mr. David McAngus, was involved in a motor vehicle accident on October 16, 1995 (two days after his twenty-seventh birthday) in which he injured his left ankle, neck and low back. He was taken by ambulance to hospital, where he was examined and released. Mr. McAngus next sought medical treatment a month later when he saw his family doctor, Dr. R.A. Gibb. In the interim, he applied for statutory accident benefits from Guardian Insurance Company of Canada ("Guardian"), payable under the Schedule¹ Some nine months later, following mediation of the disputes herein, Guardian paid income replacement benefits up to March 11, 1996, but at less than the weekly rate sought by the Applicant.

The issues in this hearing are:

1. Is Mr. McAngus entitled, pursuant to subsection 8(1) of the Schedule, to weekly income replacement benefits from March 12, 1996 on the basis that he suffers a substantial inability to perform the essential tasks of his employment?

2. In the alternative, is Mr. McAngus entitled, pursuant to subsection 10(2) of the Schedule, to weekly income replacement benefits from March 12, 1996 on the basis that he suffers a partial or complete inability to carry on a normal life as a result of the accident?

3. What is the correct quantum of the weekly income replacement benefits?

4. Is Mr. McAngus entitled, pursuant to section 36 or section 40 of the Schedule, to payment of a gym membership or home exercise equipment?

5. Is Mr. McAngus entitled to interest, pursuant to section 68 of the Schedule?

6. Is Mr. McAngus entitled to a special award, pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c. I.8, as amended (the "Act")?

7. Is Mr. McAngus entitled to his expenses of this arbitration proceeding?

Result:

1. Mr. McAngus is not entitled to weekly income replacement benefits from March 12, 1996 to February 13, 1998.

2. The weekly income replacement benefit to March 11, 1996 is $446.93. Mr. McAngus is entitled to a further lump sum amount of $752.32 and interest in accordance with section 68 of the Schedule on overdue amounts.

3. Mr. McAngus is not entitled to payment of a gym membership or home exercise equipment.

4. Mr. McAngus is entitled to a special award of $500, inclusive of interest.

5. Mr. McAngus is entitled to his expenses of this arbitration proceeding.

Hearing:

The hearing was held in Windsor, Ontario, on August 5, 6 and 7, and December 9, 10 and 11, 1997 and by telephone conference on February 13, 1998, before me, Lawrence Blackman, Arbitrator. Written submissions were received on January 9, 1998 and February 3, 1998 from the Applicant and on January 19, 1998 from Guardian.

Present at the Hearing:

Applicant:

David McAngus

Mr. McAngus'

R. Gary McLister

Representative:

Barrister and Solicitor

Guardian's

Christopher J. Schnarr

Representative:

Barrister and Solicitor

Guardian's Officer

Tamara Friedmann

Evidence and Findings:

From childhood, Mr. McAngus had significant exposure to construction work, as his father, a schoolteacher, worked summers "fixing houses." In 1990, some time after completing grade 12, the Applicant and a friend (Tom Ditchfield) had business cards printed under the name "T & D Construction." The Applicant, however, testified that the two friends only did one job together, although he kept their business cards, using them to get discounts from suppliers. Mr. McAngus stated that he subsequently spent considerable time with a motorcycle club, but did work intermittently as a bouncer or shovelling snow. He testified that between 1990 and 1993, the only construction work he did was for relatives, but he was only paid once and then only to cover his expenses. His declared income from 1990 to 1994 was only $2,894, none of which came from self-employment. He was financially maintained in large part by social assistance, unemployment insurance and his wife, Ms. Jennifer Manias.

In the summer of 1995, the Applicant was employed intermittently by his father's friend, Mr. Frank Dattilo, earning $18 an hour doing construction work. Mr. McAngus testified that in late August 1995, upon the breakup of his marriage and with no further work available from Mr. Dattilo (who was returning to his school teaching duties), he started his own construction business, using the name of the dormant unincorporated T & D Construction.

Mr. McAngus maintained that at the time of this accident, he was self-employed working full-time in construction. He therefore elected, in accordance with subsection 9(3) of the Schedule, to extrapolate over the fifty-two week period prior to the accident, the $12,000 gross income he said he earned from four contracts between September 1, 1995 and the accident date.

Mr. McAngus asserted that he had incurred minimum expenses prior to the accident (testifying that three of the four contracts were for labour only) and claimed a net weekly income replacement benefit of $832.91. In his oral evidence, he asserted that his net weekly income before taxes was actually closer to $1,500.

The Applicant further submitted that he incurred post-accident losses of $14,731.65 from self-employment and claimed, in addition to the said weekly benefit, 90 per cent of his losses, in accordance with subsections 10(7) and (8) of the Schedule.

1. Entitlement to weekly income benefits

Mr. McAngus claims income replacement benefits pursuant to both disability tests under Part II of the Schedule. The first, subsection 8(1), requires "substantial inability to perform the essential tasks of the employment in respect of which" one qualified for weekly benefits. The parties agree that Mr. McAngus was a self-employed construction worker at the time of the accident.

Mr. McAngus' alternative disability claim is pursuant to subsection 10(2), which requires at least a partial inability to carry on one's normal life. After 104 weeks from the time one first qualified for weekly benefits, the test is restricted to a complete inability to carry on one's normal life. The weekly benefit shall not be less than $185 if disability is established under this subsection.

(a) Is Mr. McAngus entitled to weekly benefits from March 12, 1996 because he suffers a substantial inability to perform the essential tasks of his employment?

(i) What were the essential tasks of Mr. McAngus' employment?

The Insurer submits that the Applicant's essential tasks must be restricted to those which he actually performed in the contracts which he claims he completed in the some six weeks before this accident. Guardian accepts that these tasks required medium to heavy physical labour. The Applicant maintains that his essential tasks must also include other tasks which he might be hired to perform as a self-employed construction worker.

I find the latter interpretation more consistent with the intention of the Schedule. What is linked to the time of the accident is employment. Once employment is established, one then looks at the tasks reasonably encompassed by that employment. If one starts work the day of the accident, it is unreasonable to only consider the work actually performed that first day. Rather, the overall essential job duties reasonably encompassed in one's employment must be considered.

I accept the November 1995 comments of the Canadian Back Institute ("CBI") that the Applicant's job was "very heavy and physical." I further accept the comments of Ms. Scarfone, an occupational therapist, that Mr. McAngus' essential job duties included roofing, installing interlocking brick, cement work and home remodelling, which required constant standing and frequent walking (sometimes on uneven surfaces such as roofs and scaffolding), carrying and lifting (up to 150 lbs. by himself), climbing, crouching, kneeling. I also accept Mr. McAngus' submission that his work might be broader and perhaps somewhat more physically demanding.

I also accept Mr. McAngus' evidence that his business depended in large measure on his own physical strength. I find that Ms. Scarfone's suggested job modification that Mr. McAngus "hire as many workers as needed to complete each job," impractical as I find that a significant part of his profit came from his taking on as much of the labour component of his contracts as possible.

(ii) Has the Applicant suffered a substantial inability to perform his essential employment tasks, subsequent to March 12, 1996?

In his job analysis, Mr. McAngus states that "the question to be asked is when will Dave McAngus be able to return to all these job descriptions, as he was able to do all this work before the accident without pain or trouble." In his written submissions, he talks about "total fitness when engaging in the tasks of his occupation," a "resolution of symptoms," a "clean bill of health to return to work," "completely recovered," "recover fully" and "fully fit," as if these are the disability tests to be decided.

With respect, they are not.

The test under the Schedule is rather whether Mr. McAngus suffers a substantial (meaning significant) inability to engage in the essential (meaning key) tasks of his construction employment. As has been noted in many arbitration decisions, pain by itself is not compensable under the Schedule. The onus is on Mr. McAngus to prove, on a balance of probabilities, the elements of the provisions under which he claims. The question is not, as posed by counsel for the Applicant, "what in the end did the Insurer positively prove or disprove." Challenging Mr. McAngus' credibility does not shift the legal burden of proof to the Insurer.

The Applicant submitted that he has no obligation to accept opinions that "would necessarily result in him engaging in activities that would endanger him — put him at risk of exacerbating his current injuries or risking new injuries." Mr. McAngus relied on the medical evidence of his family doctor, Dr. R.A. Gibb and an orthopaedic specialist, Dr. G.M. Annisette. The reports in evidence, however, do not say that returning to work would endanger the Applicant or would exacerbate his injuries or risk further injury.

Dr. Annisette saw Mr. McAngus only once, on October 25, 1996. His diagnosis was whiplash, mechanical low back pain and left ankle sprain. Physical findings were normal except for tenderness. Dr. Annisette repeats Mr. McAngus' subjective complaints, but does not offer his own opinion as to any disability. He merely states "that symptoms of soft tissue injury usually take about 18 months to two years to settle post motor vehicle accident." While this observation may assist a tort general damage claim, it is insufficient to meet the disability test in question.

In an extremely succinct response to Mr. McAngus' direct written questions of November 20, 1997, Dr. Gibb indicates that the Applicant can only "partake in supervisory work duties." In a brief note dated December 8, 1997, Dr. Gibb states that Mr. McAngus' current symptoms are chronic left ankle instability/tendonitis, chronic mechanical lumbar back pain/muscle strain and chronic neck/upper back strain.

There is no indication in Dr. Gibb's reports, however, of the basis of his conclusions, or that he is relying on anything other than the subjective complaints of the Applicant. Mr. McAngus testified that his family doctor has told him that he cannot go back to work as long as he is in pain or as long as he cannot do all of his work. I have no medical or reasonable explanation as to why Mr. McAngus must allegedly be completely pain free before he can resume his prior job duties.

In any event, despite Dr. Gibb's restrictions, Mr. McAngus himself concedes that he is able to do more than purely "supervisory work duties." He testified, for instance, that he can stain and varnish, do some nailing and assumes he can use a power drill. Surveillance in April 1996 shows Mr. McAngus making a sandbox for his son. Surveillance the next month shows him, amongst other things, painting, cutting aluminum and removing old moulding. Mr. Dattilo testified that he saw Mr. McAngus laying ceramic bathroom tiles at the Applicant's father's home. Mr. McAngus, however, states that these were lighter tasks done at a leisurely pace and with pain (which required him to take analgesics and liquor). He maintains that he cannot work with the requisite speed, strength or endurance of his regular work.

Significant medical evidence, however, was presented contrary to the Applicant's position.

Dr. S.W. Bartol, an orthopaedic surgeon, saw Mr. McAngus at the request of the Insurer on June 10, 1996. He concluded that:

there is no evidence of an ongoing physical impairment . . . Injuries were of a soft tissue nature only and were minor in nature . . .There are ongoing symptoms which appear to be at a nuisance level, however, there is no objective evidence of a serious underlying impairment. Based on my review of the job description as provided by Mary Pat Scarfone, I would conclude that, in fact, Mr. McAngus is capable of resuming his pre-accident employment as an independent contractor. There are no specific restrictions on activities which would prevent him from resuming his normal occupation and no specific medically indicated restrictions are necessary at this time. I would advise that Mr. McAngus wear an ankle brace or that he wear laceup work boots when on the construction site. This will give him some increased support for his ankle and should reduce symptoms significantly . . . These are not expensive and are readily available at health supply stores in this area . . . If worn in conjunction with a work boot, this provides excellent stability.

I received no medical evidence from Mr. McAngus as to why Dr. Bartol's suggestion provided an inadequate solution to the alleged ankle problem.

Mr. McAngus was subsequently seen in October 1996 at a Designated Assessment Centre, for a multi-disciplinary medical assessment. The orthopaedic surgeon, Dr. J. Pepin, concluded that Mr. McAngus was "physically capable of substantially performing his previous occupation, that of being a construction worker, construction company owner." Mr. C. Yeung, a physiotherapist, stated that a thoraco-lumbar support and muscle strengthening exercises would help the Applicant overcome deconditioning and muscle weakness. Although he stated that physical examination showed left ankle weakness, he also felt that Mr. McAngus was "capable of resuming his pre-accident employment as a construction worker." Ms. S. Brunet, a kinesiologist, indicated that although Mr. McAngus "put forth fair effort during the evaluation," "he was demonstrating self-limitation and [his] reported inability to lift more may not have been reflective of his true abilities." Although she felt that he might have to modify his job somewhat (such as carrying one bundle of shingles at a time rather than two) she also felt that Mr. McAngus "appears to exhibit the ability to perform the essential tasks of his pre-accident job."

An earlier report by the CBI in January 1996 indicated that Mr. McAngus' "present functional capabilities are nearly a job match." Their March 11, 1996 discharge report opined that "presently Mr. McAngus exhibits the functional capabilities to return to his job. It would be beneficial if he had the opportunity to return on a graduated hours [sic] due to the heavy nature of the job." Their last report, dated March 22, 1996, noted that Mr. McAngus had indicated that he had been "on his back for 5 days" following an attempt to return to work (largely supervising, but also doing prolonged standing, walking, bending and some hammering). Nonetheless, it recommended that Mr. McAngus "attempt full return to work and continue with a home exercise program either at home or community based facility." The CBI concluded that "based on his recorded functional capabilities it is inconsistent that he would have such an elevated pain level from this type of word as described above."

The Insurer submits that Mr. McAngus has not proven entitlement to weekly benefits subsequent to the CBI discharge report. I agree. While the suggestion that it might be beneficial for Mr. McAngus to gradually return to his job duties could imply an inability to immediately return to the essential tasks of his construction work, this suggestion appears premised on Mr. McAngus' purely subjective complaints, which I do not accept for the following reasons:

1. One would have anticipated that with the pain level alleged by Mr. McAngus, even his conceded limited return to work would have resulted in increased symptoms and hence medical assistance. However, Mr. McAngus did not seek any medical help during the six months between late March and late September 1996. I do not accept his explanation that he did seek any help because there was nothing doctors could do for him, especially in light of his regular attendances with Dr. Gibb after September 1996, following the failed mediation held August 9, 1996 and his four renewals of 60 Tylenol #3 (allegedly for hangovers) the year before this accident.

2. If one were indeed suffering from disabling pain, it is logical that one would follow medical advice aimed at alleviating one's symptoms. However, I received no evidence that Mr. McAngus followed Dr. Bartol's recommendation concerning an ankle support, or Mr. Yeung's suggestion concerning thoraco-lumbar support and muscle strengthening exercises, or the exercise programme recommendations of Dr. Annisette and the CBI. Although the Applicant testified that his left ankle is "a major factor" in his ongoing disability and that his family doctor told him to get an ankle brace, he stated that he has no money for this expense, although he attested to spending more than $1200 on movie rentals since the accident. No explanation was provided as to why the recommended items were never requested from the Insurer.

3. Mr. McAngus argued that the Insurer's failure to pay for physiotherapy following his discharge from the CBI has prolonged his symptoms. However, there is no evidence that Mr. McAngus ever submitted a request for such treatment, even after a letter from the Insurer dated October 6, 1996 which stated that the "Health Practitioner's Certificate has been received from Dr. Gibb, however he has not recommended any further treatment. Please advise if you are currently participating in a treatment program." I do not accept the Applicant's response that he has simply been waiting since March 1996 for the Insurer to arrange physiotherapy.

4. Mr. McAngus testified that his problem climbing and walking on uneven surfaces only affects him "once in a while." His main concern is that his ankle "might" give out. Mr. McAngus, however, had suffered a previous left ankle injury in July 1994. Ms. Scarfone notes in her report that Dr. Gibb (the only doctor who saw the Applicant both before and after the car accident) could not comment on whether Mr. McAngus' present left ankle instability was related to the October 16, 1995 accident or the previous injury. Accordingly, I am not persuaded that this accident is the cause, or even a significant contributing factor, to any ongoing ankle complaints after the termination of weekly benefits on March 11, 1996.

5. Although the individuals who testified on the Applicant's behalf would have observed him after the accident, there was little evidence forthcoming from them confirming any actual post-accident disability. His former wife, Ms. Manias, gave no evidence in this regard. His next door neighbour, Mr. Robert Wood, merely testified that before the accident, Mr. McAngus was a "superman" and that since the accident, he "is not the same," without any elaboration.

Mr. McAngus' business contact, Mr. Jim Savage, testified that he could not recall the Applicant complaining post-accident that he could not work because he was not well. Mr. Dattilo did not give any evidence of any post-accident impairment. Mr. McAngus' friend, Mr. Dan Grabish, with whom he lived after the accident, testified that in the fall of 1995, the Applicant was "pretty sore," complained of pain and was limping. His only other comment was that Mr. McAngus had difficulty in the morning vacuuming and "carrying stuff." It is unclear, however, as to what period of time Mr. Grabish was referring. In any event, Ms. Scarfone's functional assessment in 1995 (well before termination) indicated that Mr. McAngus reported "that he vacuums all of the floors [of his two story home] every two days now."

Ms. Connie Carter, testified that Mr. McAngus (with helpers) did some renovation work at her home in July 1996, but told her that he would have to leave the job and go home because his back hurt. As Ms. Carter was at her own job while the renovations were being done, I put little weight on this evidence.

6. I have great difficulty with the overall reliability of Mr. McAngus' evidence. His explanations to numerous possible inconsistencies raised by the Insurer, taken individually appeared conceivable, but when taken collectively, seemed implausible and inconsistent with the intelligence and logic manifested by this Applicant.

For example, Mr. McAngus submitted that the $12,000 he grossed from the four contracts netted him in excess of $8,000, prior to taxes. Yet when he opened a bank account a month after the accident, only $4,000 was deposited, although Ms. Manias was still paying the mortgage on his house. Nonetheless, he testified that he did not pay income tax because he did not have any money for an accountant.

Mr. McAngus further testified that he returned to his business after the accident, but only in a supervisory capacity. He submitted that he did not make money on his post-accident contracts and in fact lost more than $14,000. Nonetheless, he asserted that he had to continue his business because otherwise he would have nothing to come back to. However, his main contact, Mr. Savage (who is employed by a company named Can Am Native Homes, which, with the assistance of CMHC, hires contractors to do renovations) testified (and the Applicant confirmed) that there was no reason why Mr. McAngus had to keep bidding on projects to be considered for work in the future. In fact, Mr. Savage testified that he was "struggling" to find contractors and had a lot of jobs on hold because of a lack of contractors.

Mr. McAngus also testified that because of post-accident losses, he had borrowed a lot of money. However, he could not estimate how much he had borrowed and did not provide any proof of any debts. He testified that he had "maxed" out his credit card at more than $6,000, but no proof was provided. His bank account does show a dwindling balance, but nothing close to the losses claimed, let alone adding in one's everyday purchases.

Mr. McAngus may have some measure of ongoing pain. This pain may be aggravated to some extent by the physical nature of his work. I am not, however, persuaded that Mr. McAngus, on a balance of probabilities, has been substantially unable to perform the essential tasks of his construction employment, subsequent to the date of termination.

(b) In the alternative, is Mr. McAngus entitled to payment of weekly income replacement benefits ongoing from March 12, 1996, on the basis that he suffers a partial or complete inability to carry on a normal life as a result of the accident?

For the reasons set out above, I do not find that Mr. McAngus has established, on a balance of probabilities, that his subjective complaints were sufficient to cause him a partial inability, let alone a complete inability to carry on a normal life, beyond the date of termination. Under section 2 of the Schedule, "partial inability to carry on normal life" requires a "substantial inability" to engage in certain activities, including mobility activities. As early as November 27, 1995, the Canadian Back Institute reported that "David is doing the majority of the household activities however, less frequently and complains of increased levels of pain while doing his activities." By late 1995, Ms. Scarfone reported that:

Mr. McAngus has maintained function in most areas of activities of daily living. Overall, it appears that his frequency of performance has been affected rather than his actual ability to perform tasks. By pacing his activity performance more consistently throughout the day and week, it is believed that he should be able to significantly reduce his discomfort with task performance. . . . it is not anticipated that Mr. McAngus should have increased or prolonged difficulty in resuming his full previous performance of activities of daily living."

The paucity of objective, independent or logical evidence to support Mr. McAngus' assertions as to his disability leads me to conclude that after March 12, 1996, he has not suffered a partial or complete inability to carry on a normal life, as defined in the Schedule.

2. Quantum of weekly income replacement benefits

Guardian disputes that Mr. McAngus' alleged income was earned in the some six weeks claimed, or that he began his construction business in the fifty-two weeks before the accident and therefore submits that he can not take advantage of the subsection 9(3) extrapolation provision.

The Insurer further submits that there is no objective or credible evidence confirming that Mr. McAngus' gross income from the four alleged contracts was indeed $12,000.

Guardian does not accept Mr. McAngus' assertion that he had minimum pre-accident expenses. Their accountant's initial weekly benefit calculation was $264.48. The Applicant claims $832.91.

The Insurer rejects Mr. McAngus' claimed post-accident loss of $14,731.65 and submits that he earned income post-accident which should be deducted from his weekly benefit.

I will deal with each of these disputes in order.

(a) Did the Applicant start the self-employment in which he was engaged at the time of the accident during the fifty-two weeks before the accident?

A self-employed insured must have started the self-employment in which he or she was engaged at the time of the accident within the year before the accident to obtain the advantage of the subsection 9(3) extrapolation. The Schedule does not require that the Applicant prove that he or she became self-employed for the first time during this fifty-two week period.

This is consistent with the overall intent of this Schedule to provide a fairer measure of contractual compensation, reflecting that special damage tort recovery was abolished under this legislation for accidents involving the use or operation of an automobile. I find that subsection 9(3) seeks to reflect more accurately the anticipated income of someone who commenced a new business endeavour within the year preceding the accident.

It was essentially conceded and I find, that at the time of the accident, Mr. McAngus was self-employed full-time in a sole proprietorship business enterprise for monetary profit. I am also persuaded, on a balance of probabilities, based on the extensive corroborative evidence of the numerous lay witnesses, that the employment in which Mr. McAngus was engaged at the time of this accident differed markedly from any prior construction work which he may have performed.

Mr. Savage impressed me as a very credible and independent witness, although his relationship with Mr. McAngus was closer than that of a casual acquaintance. Mr. Savage's evidence corroborated that of the Applicant, that in late August 1995, he helped Mr. McAngus design draft contracts using Mr. Savage's computer precedents, which is consistent with starting a new business.

I also accept the evidence of Ms. Jennifer Manias that while living with Mr. McAngus until mid-August 1995, she fought with the Applicant over his freeloading and nagged him to get a job, to which he responded, "one day, when I grow up." I also accept the evidence of Mr. Dattilo (who was the only witness called by the Applicant whom the Insurer said it had "no reason to doubt") that in the summer of 1995, he was not aware (either as an employer or as a friend of the Applicant's father) that Mr. McAngus did contracting work on his own. I also find it inconsistent that if Mr. McAngus had his own business prior to September 1995, that he would work for Mr. Dattilo for considerably less remuneration.

It may be that Mr. McAngus had done more work with his former friend, Tom Ditchfield, than the one job he testified to, or had done more jobs on his own, as asserted by the Insurer, based on amongst other evidence, the T & D business cards which Mr. McAngus kept in his house, business discounts which he had arranged and certain pre-accident invoices.

However, the evidence before me is consistent that at the time of the accident, the Applicant was not involved in a partnership or any other business relationship with Mr. Ditchfield. While Mr. McAngus may have earned some small amount, in terms of money or non-monetary compensation, prior to the six weeks before the accident, I am persuaded that this was essentially ad hoc, sporadic work where the compensation, if any, was often non-monetary. This is distinctly different from the employment in which Mr. McAngus was engaged at the time of this accident.

Therefore, in accordance with subsection 9(3) of the Schedule, I find that Mr. McAngus may extrapolate his income from "the part of the fifty-two-week period for which the person earned income." Since Mr. McAngus only "earned" income from September 1 to October 16, 1995, only this period of 46 days (i.e. 6.57 weeks) should be extrapolated over the rest of the fifty-two week period.

(b) What was the Applicant's gross income in the 6.57 weeks before the accident?

Guardian cites the decision of Calogero and the Co-Operators, (OIC A-000251, November 20, 1991) for the proposition that "The Applicant bears the onus of proving his sales and his profits. That proof can only be accomplished by reliable and credible evidence." I agree.

Mr. McAngus testified that all four of his pre-accident contracts were paid in cash and totalled $12,000. This was supported by the verbal evidence of two clients and a written deposition by a third (whose poor health did not permit him to testify). Two of these witnesses (Mr. Krautner and Mr. Grosjean), appeared to have a fairly arm's length relationship with the Applicant. The fourth contract, in the amount of $500, was not a source of contention. I find it significant that the Applicant opened his post-accident bank account with a substantial opening balance of $4,000.

Furthermore, the gross amount of the contracts appeared to be in line with the hourly rate and days of work claimed by the Applicant. Mr. Savage testified that Mr. McAngus prices were in line. I received no evidence from Guardian that the gross amount the Applicant charged on the four contracts was unreasonable.

The Insurer raised many concerns as to the truthfulness of the four handwritten contracts. Many of these points were purely speculative (for example, how the Applicant was able to line up four contracts consecutively), trivial (why were all the contracts written with the same type of pen) or confirmed under oath despite rigorous cross-examination (ie. that Mr. Krautner and Ms. Carter purchased their own materials). I find persuasive the evidence of Ms. McGregor, an employee of Guardian's accountants, Coopers & Lybrand ("Coopers"), that each customer had confirmed to her during her initial investigation that Mr. McAngus had done the work claimed, that it had been performed after September 1, 1995 and that he had been paid "pretty well" what he claimed. I do not find the question of whether Mr. Krautner paid in one or two installments to be a significant discrepancy.

Accordingly, based on the corroborative evidence, I am persuaded, on a balance of probabilities that Mr. McAngus' four contracts in the 6.57 weeks before the accident totalled $12,000.

(c) What were the Applicant's expenses in the 6.57 weeks before the accident?

Mr. McAngus does not dispute the Insurer's calculation that his claimed pre-accident expenses represent 25.4 per cent of his gross income. Encompassed within these expenses were transportation (representing less than 2 per cent of gross income) and meals (.01 per cent).

Mr. McAngus, however, asserts that his post-accident expenses amount to 147.7 per cent of his post-accident gross income. Transportation has increased to 7 per cent, "food and promotion" is now almost 15 per cent. A category labelled "miscellaneous" (which includes dry cleaning two-piece suits, eyeglass tinting and dog vaccinations) amounts to just shy of 13 per cent of post-accident income.

Materials alone represent almost 80 per cent of Mr. McAngus' gross post-accident income. I do not accept the Applicant's arguments that this massive increase was due to the incompetence of employees he had to hire, who would spill paint or waste other materials. Rather, it seems obvious that Mr. McAngus has sought to maximize both his pre-accident net income and his post-accident loss.

I think that it is a basic premise that Mr. McAngus must use the same accounting approach to both his pre- and post-accident income.

I agree with Guardian's accountant, Mr. Edwards, that the documentation supplied by Mr. McAngus does not support any specific benefit quantum and one can only "guess intelligently" at a fair number. I do not think that merely picking a minimum weekly benefit of $185 or zero would be fair. However, I do not accept Coopers' proposed compromise, which assumes that Mr. McAngus was self-employed during the fifty-two weeks before the accident and that he supplied the materials for all of the pre-accident contracts (and not merely for Mr. Grosjean), assumptions which I do not accept, based on the sworn evidence of the Applicant's lay witnesses.

Furthermore, I have insufficient evidence by which to review four inches of post-accident documentation and determine which expenses are legitimate. Rather, I assume that the Applicant's post accident expenses (other than for materials, labour and dumping fees which Mr. Krautner and Ms. Carter testified were not included in their contracts) are legitimate and determine that such expenses amount to 41.9 per cent of gross income.² As none of the corroborative witnesses called was in a position to testify as to what Mr. McAngus' personal expenses might be, I find it reasonable to assume that this percentage of variable expenses (transportation, his personal clothing and meals etc.) applied equally to Mr. McAngus' pre-accident employment.

I therefore calculate Mr. McAngus' weekly income replacement benefit, before taking into account any post-accident losses or income, as follows:

Gross Income

$12,000.00

Less labour and material for the Grosjean contract (Exhibit 57)

• 2,433.00

Less 41.9 per cent of gross income for other expenses -

• 5,028.00

Net Income, prior to taxes

4,539.00

Divided by 6.57 weeks

690.87

Net weekly income under the Tables (Column I as agreed)

496.59

90 per cent in accordance with section

10,446.93

Therefore, I find Mr. McAngus' weekly income replacement benefit to be $446.93.

(c) Post-accident Income

Both Mr. Lumbard and Ms. MacGregor testified that Mr. McAngus had indicated to them his desire to try to keep to keep his business going. I accept this evidence.

I also accept that due to his initial injuries, it was reasonable for Mr. McAngus to hire contract labour to replace, in some measure, his usual physical involvement. I further accept that hiring employees would erode his profit margin and potentially create losses.

Mr. McAngus submits that from February to March 1996, he sustained a loss of $1,157.24. Deducting 50 per cent of the claimed meal expense (in accordance with Mr. Edwards' evidence of income tax rules) leaves a loss of $835.92. I accept this loss. Ninety per cent of this loss may be claimed, which amounts to $752.32. Mr. McAngus's own calculations show that he made a profit from April to August 1996. Simple arithmetic, based on the Applicant's figures, indicate that between September 1996 and September 1997, his expenses were, however, 250 per cent of his alleged income and that he sustained a loss of over $14,000. Materials alone are alleged to be greater than his claimed income. I do not accept that the total expense and income amounts claimed in this last period are accurate or that any loss, let alone a loss of over $14,000, was incurred after September 1996 as a result of this accident.

3. Is Mr. McAngus entitled to payment of a gym membership or home exercise equipment, pursuant to section 36 or section 40 of the Schedule?

Reasonableness is required under both sections 36 and 40 to support a medical or rehabilitation expense. No particulars of this claim whatsoever were provided. I have no idea what is being proposed by the Applicant, the cost or whether it is in accordance with the recommendations made in 1996. The claim is therefore denied.

4. Is Mr. McAngus entitled to a special award, pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c. I.8, as amended?

Based on my finding that Mr. McAngus did not meet the disability tests after March 11, 1996, I find that Guardian was not unreasonable in denying weekly benefits after that date.

Guardian appears to have accepted early on that Mr. McAngus was initially disabled from returning to work as a result of this accident. I think that this was a reasonable position, given the early information provided by the Canadian Back Institute. However, Guardian did not pay Mr. McAngus any benefits, as firstly they were awaiting a report from Coopers and secondly, they denied that Mr. McAngus met the partial or complete inability test which would have provided him with a minimum weekly benefit of $185.

The first report from Coopers is dated March 11, 1996. It recommended that the weekly benefit "should be set at $272.54" up to January 22, 1996. While it cautioned that certain requested information had not been forthcoming and that it had "serious concerns regarding the integrity and completeness of the information provided," these concerns appear to have been taken into account in arriving at the said figure. Coopers provided its opinion as to what it called the "restrictive provisions regarding the insurer's ability to obtain repayment of the amounts overpaid" under the Schedule, but its caution was not against paying anything but rather to frequently monitor Mr. McAngus' post-accident income. Nonetheless, Guardian did not pay any weekly benefits.

Subsequently, counsel for Mr. McAngus forwarded by letter dated March 26, 1996, statements from the three most significant pre-accident clients (Manias, Wood, and Krautner) which addressed certain of the concerns of the Insurer. Still, weekly benefits were not paid.

Only after the mediation held August 9, 1996, did the Insurer agree to pay weekly benefits from October 23 to November 28, 1995 (but only in the weekly amount of $185, based on the occupational therapist's report that Mr. McAngus could perform his normal life activities as of the latter date). Further weekly benefits were paid to March 12, 1996, but at the rate of $105.91 (based on not accepting Cooper's entirely speculative assumption as to Mr. McAngus' income prior to September 1, 1995.)

A series of contradictory letters were then sent by the Insurer. An August 27, 1996 Stoppage of Payment Notice states that based on Dr. Bartol's report, no further consideration would be given to weekly benefits beyond September 12, 1996 (although Mr. McAngus had only been paid to March 12, 1996). A September 17, 1996 Explanation of Assessment indicates that income replacement benefits would now continue until the date of the requested DAC assessment (but weekly benefits did not continue). By letter dated November 12, 1996, the Insurer indicated that as the DAC indicated that there was no substantial disability, "your weekly disability benefits will be considered to October 9, 1996, the date of your last assessment" (benefits, however, remained unpaid after March 12, 1996).

The reason for these incongruous letters, is that the Insurer was citing, but not following, the stoppage in weekly benefits provisions under section 64. I find this to be unreasonable. Guardian's representative, Ms. Friedmann, testified that the minimum $185 was never paid because mobility activities in which the insured ordinarily engaged, which are included under section 2 (partial inability to carry on normal life) cannot include employment mobility activities. The provision, however, contains no such restriction. No case law was provided to support this contention. I find Guardian's position unreasonable.

Mr. McAngus' counsel submits that "this is a case of intentional deception, misinformation, withholding and delay of benefits by the insurer or its representatives thereby entiling [sic] my client to the maximum special award under this section" (which is 50 per cent of outstanding entitlement, including interest). No evidence of such intent was provided. In this case, I find that a special award is warranted, but should reflect a percentage of the twenty weeks of benefits payable up to March 12, 1996, at the minimum amount of $185 per week under section 10, (which totals $3,700). I think that in the circumstances of this case, that a hearing was necessary to determine any entitlement over that amount.

I further find it important that the sum of $2,566.51 was paid by Guardian, albeit late. In view of all of the circumstances, I find that a special award of $500, inclusive of interest, is appropriate.

5. Expenses

Mr. McAngus was successful, in part, in this arbitration.

The evidence presented at this hearing largely dealt with the quantum issue. As noted above, I think that a hearing was necessary to determine this issue.

I, therefore, exercise my discretion to award the Applicant his expenses of this arbitration proceeding, in accordance with the Insurance Act.

Order:

1. Guardian shall pay Mr. McAngus a weekly income replacement benefit of $446.93 from October 23, 1995 until March 11, 1996 (less the amount of weekly income replacement benefits already paid), together with the further sum of $752.32 and interest on the overdue amounts in accordance with section 68 of the Schedule.

2. Guardian shall pay Mr. McAngus a special award of $500, inclusive of interest.

3. Guardian shall pay Mr. McAngus his expenses of this arbitration proceeding.

August 31, 1998

Lawrence Blackman

Arbitrator

Date

Witnesses:

1. Mr. David McAngus

2. Ms. Jennifer Manias

3. Mr. Robert Wood

4. Mr. George Krautner

5. Mr. Jim Savage

6. Mr. Dan Grabish

7. Mr. Frank Dattilo

8. Ms. Connie Carter

9. Mr. Paul Sarkis

10. Ms. Brenda MacGregor

11. Mr. Ryan Lumbard

12. Ms. Tamara Friedmann

13. Mr. Daniel Edwards

The proceedings were transcribed by Ms. Dorothy Desjardins, Ms. Suzanne Mills, Ms. Sharon Masse, Ms. Deirdre Merritt and Ms. Ann Carter of E. Beryl MacMillan, Official Examiner.

Exhibits:

Exhibit 1

Copies of the clinical notes and records of Dr. R.A. Gibb.

Exhibit 2

Copy of consultation note of Dr. G. Annisette, dated October 25, 1996.

Exhibit 3

Copies of the clinical notes and records of the Canadian Back Institute.

Exhibit 4

Copy of report of Dr. S.W. Bartol, orthopaedic surgeon, dated July 30, 1996.

Exhibit 5

Copy of report of Ms. M.P. Scarfone, assessments done November 28, December 5 and 12, 1995.

Exhibit 6

Four page job analysis, with hand-written note of Dr. R.A. Gibb, dated February 24, 1997.

Exhibit 7

Four original T & D Construction contracts dated September 1 and 23 and October 8 and 9, 1995.

Exhibit 8

Two original contracts between T & D Construction and Blue Heidi Nicholls, both dated October 1, 1995.

Exhibit 9

Copies of seven T & D Construction contracts dated October 23 (two), October 28, November 2 (two), November 21 and December 31, 1995.

Exhibit 10

Copy of contract between T & D Construction and Can Am Native Homes, dated November 21, 1996, re "1983 Central."

Exhibit 11

Four original pages of Income and Expenses, February to August, 1996, inclusive.

Exhibit 12

Copy of Application for Accident Benefits, dated November 15, 1995.

Exhibit 13

Copy of one page sheet signed by Mr. Frank Dattilo.

Exhibit 14

Copy of Guardian Initial Contact Form, dated November 16, 1995.

Exhibit 15

Copy of statement of Mr. David McAngus, dated November 2, 1995.

Exhibit 16

Copies of eleven pages of statements of Windsor Family Credit Union Ltd., for T & D Construction, for periods ending November 30, 1995 to February 28, 1997.

Exhibit 17

Copies of dealer application and invoices from Meloche Windows Ltd.

Exhibit 18

Original computer printouts for income tax filings, 1990 to 1994, inclusive.

Exhibit 19

Copies of TD Visa records for Ms. Jennifer Manias.

Exhibit 20

Copy of file from Federated Insurance Company of Canada.

Exhibit 21

Copy of Application for Assistance with the Ministry of Community and Social Services, dated April 26, 1994.

Exhibit 22

Copy of "Preapp" Form of the City of Windsor, Social Services Department, registered February 23, 1994.

Exhibit 23

Copy of July 15, 1997 letter from the City of Windsor, Social Services Department.

Exhibit 24

Copy of undated statement of Mr. Robert Wood.

Exhibit 25

Decoded OHIP summary, dated March 10, 1997.

Exhibit 26

Original letter from Mr. R.G. Grosjean, dated August 4, 1997.

Exhibit 27

Copy of letter from Mr. R. Gary McLister, dated March 26, 1996.

Exhibit 28

Original six page statement of Mr. George Krautner, dated March 26, 1996.

Exhibit 29

Copy of unsigned statement of Mr. Daniel Grabish, dated November 2, 1995.

Exhibit 30

Copies of the business records of T & D Construction.

Exhibit 31

Original letter from Mr. R. Gary McLister to Dr. R.A. Gibb, dated November 20, 1997 and Dr. Gibb's handwritten responses.

Exhibit 32

Copy of Dr. Gibb's clinical notes, March 24 to December 8, 1997, inclusive.

Exhibit 33

Original note from Dr. R.A. Gibb, dated December 8, 1997.

Exhibit 34

Copy of report of Coopers & Lybrand, dated December 2, 1997.

Exhibit 35

Copies of two pages of records from Veteran Plumbing & Supplies.

Exhibit 36

Copy of letter from Guardian to Mr. McAngus, dated August 27, 1996.

Exhibit 37

Copy of "Stoppage of Payment Notice" from Guardian to Mr. McAngus, dated August 27, 1996, with Explanation of Assessment by Insurance Company.

Exhibit 38

Copies of two invoices from Waco Equipment Rentals,

Exhibit 39

Original letter from Stonescape Exteriors dated "December 3/79" [sic], together with invoices dated October 31, 1995 and April 22, 1996.

Exhibit 40

Two photographs of Mr. David McAngus' garage at 977 Pierre Street.

Exhibit 41

Five photographs of the property of Mr. Gary McAngus at 1035 Talbot Street.

Exhibit 42

Quote from Meloche Windows Ltd. dated December 8, 1997 and one page suggested price list.

Exhibit 43

Copy of report of Rose City Investigations, dated December 6, 1995.

Exhibit 44

Copy of report of Rose City Investigations, dated January 22, 1996, re Mr. Robert Deans.

Exhibit 45

Copy of report of Rose City Investigations, dated February 16, 1996, re Mr. Robert Deans

Exhibit 46

Copy of report of Rose City Investigations, dated May 8, 1996.

Exhibit 47

Copy of report of Rose City Investigations, dated June 19, 1996.

Exhibit 48

Copy of report of Rose City Investigations, dated November 27, 1997.

Exhibit 49

Three surveillance tapes.

Exhibit 50

Copies of two pages of handwritten notes of Ms. Brenda MacGregor.

Exhibit 51

Copy of Explanation of Assessment by Guardian, dated November 29, 1995.

Exhibit 52

Copy of Explanation of Assessment by Guardian, dated August 21, 1996.

Exhibit 53

Copy of Explanation of Assessment by Guardian, dated September 17, 1996.

Exhibit 54

Copy of Explanation of Assessment by Guardian, dated October 8, 1996.

Exhibit 55

Copy of letter from Guardian to Mr. David McAngus dated November 12, 1996, together with copy of Explanation of Assessment by Guardian of same date.

Exhibit 56

Copy of report of Coopers & Lybrand, dated March 11, 1996.

Exhibit 57

Copy of report of Coopers & Lybrand, dated January 28, 1997.

Exhibit 58

Curriculum Vitae of Mr. Daniel M. Edwards.

Exhibit 59

Copy of letter from Mr. R. Gary McLister dated April 9, 1997 and copies of bank statements of T & D Construction, August 1996 to February 1997.

Exhibit 60

Worksheets of Mr. Daniel Edwards, prepared December 9, 1997.

Exhibit 61

Curriculum Vitae of Dr. John W. Pepin, Mr. Chun Yeung M.Sc. and Ms. Susanne Brunet B.H.K.

Exhibit 62

Human Resources Development Canada, wages for trades and skilled transport and equipment operators.

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94 and 463/96.
2. 2I have assumed that "food and promotion" totally relates to food and that the employees' meals paid by the Applicant represent 20 per cent of his labour cost (ie. $16 per day for two fast food type meals documented by the receipts, divided by $80 a day representing $10 an hour for eight hours work). Deducting 20% of the sub-contract expenses of $4,069.50 from the total food and promotion expense of $6,690.93, leaves $5,877.03 for that category. I accept Mr. Edward's evidence that only 50 per cent of this expense can be claimed for income tax purposes, i.e. $2,938.52. When added to the equipment rental, fuel and miscellaneous expenses, the total is $12,931.35, or 41.9 per cent of Mr. McAngus' claimed post-accident income of $30,890.25.