Neutral Citation: 1999 ONFSCDRS 172

FSCO A97-001386

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JUDY ZIRGER

Applicant

and

COMMERCIAL UNION ASSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Dirk VanderBent

Heard:

April 6, 7, 8, and 16, 1999, at Burlington Written submissions were completed on April 30, 1999.

Appearances:

David B. Hayward for Mrs. Zirger Brian Atherton for Commercial Union Assurance Company

Issues:

The Applicant, Judy Zirger, was injured in a motor vehicle accident on September 20, 1995. She applied for and received certain statutory accident benefits from Commercial Union Assurance Company ("Commercial Union"), payable under the Schedule.¹ Commercial Union never paid weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Zirger applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Has Mrs. Zirger suffered a substantial disability to perform the essential tasks of her employment as a desktop publisher at any time since February 1, 1996, thereby qualifying her to receive weekly income replacement benefits ("IRBs"), pursuant to subsection 7(1) of the Schedule?

2. Is Commercial Union entitled to deduct payments made to Mrs. Zirger by her employer after the motor vehicle accident, pursuant to subsection10(3) or alternatively, subsection 75(1) of the Schedule?

3. Is Mrs. Zirger entitled to receive interest on any outstanding benefits payable pursuant to section 68 of the Schedule?

Result:

1. Mrs. Zirger suffered a substantial disability to perform the essential tasks of her employment from February 1, 1996, to August 12, 1996, and for the period from May 14, 1997 to August 7, 1997.

2. Mrs. Zirger received employment income for the period from August 12, 1996, to May 14, 1997, which would be deductible pursuant to subsection 10(3) of the Schedule. The quantum of her weekly employment income is to based on her pre-accident salary of $30,000 per year. No payments are deductible pursuant to subsection 75(1) of the Schedule.

3. Mrs. Zirger is entitled to interest on all outstanding amounts.

EVIDENCE AND ANALYSIS:

Background:

On September 20, 1995, Mrs. Zirger was "rear-ended" by another vehicle while she was stopped at an intersection. She described the collision as high impact, with enough force to blow the lid from a gallon can of paint which she had in the car with her. She described what felt like an explosion between her shoulder blades. She suffered bruising to her right arm. She attended at the emergency department at Oakville Trafalgar Hospital the same day. The hospital records confirm a diagnosis of muscle strain. Mrs. Zirger testified that she experienced significant muscle stiffness the next day, and was unable to move her neck left or right. Her pain continued to increase over the next few days. She did not return to work. She consulted her family physician, Dr. Thomson, who treated her before the accident. Mrs. Zirger had been diagnosed with fibromyalgia in 1994, and at the time of the accident was actively participating in aquatherapy, massage therapy, and a supervised exercise program. When Dr. Thomson saw her after the accident, he recommended analgesics and an intensive physiotherapy program. Mrs. Zirger pursued this treatment, and since that time has also pursued several other treatment modalities. She continued to experience severe pain and functional restriction in her right shoulder, which limited the use of her right arm. She was eventually diagnosed as suffering from an impingement in her right shoulder, which was ultimately corrected by arthroscopic surgery in May 1997.

Prior to the motor vehicle accident, Mrs. Zirger was employed by Elreg Distributors Ltd. ("Elreg"), a company which distributes automotive parts. At the time of the accident, she and her husband, Richard Zirger each had a 42.5 percent interest in this privately held company, which they owned indirectly through a holding company. The remaining 15 percent of the shares in Elreg are owned by Mark MacDonald, who was employed by Elreg as its vice-president of sales and marketing. Mr. Zirger was the chief executive officer who ran the business. This corporate structure has not changed since the accident. Although Elreg is not a large company, its annual sales in 1995 totaled just over $3 million, and have increased each year.

Mrs. Zirger has worked for Elreg since 1986. At the time of the accident, her main function was desktop publishing. She utilized a personal computer to produce the automotive parts catalogue, and other sales and promotional materials distributed by Elreg to its customers. Commercial Union agrees that Mrs. Zirger was a paid employee, and not self-employed, for the purpose of determining her entitlement to IRBs. The parties agreed the quantum of her benefit is $389.45 per week (basing her pre-accident income on a salary of $30,000 per year). Elreg has always paid Mrs. Zirger's salary by cheque, after making all the usual source deductions and tax remittances.

For several years after she began working for Elreg, Mrs. Zirger worked a regular 40-hour work week, occasionally working on weekends as required to meet production deadlines. However, when she was diagnosed with fibromyalgia in 1994, she reduced her work hours. The evidence conflicted on the number of hours worked each day, but on Mrs. Zirger's own evidence, her hours did not exceed 6 to 6.5 hours per day. Mrs. Zirger was paid a gross salary of $30,000 per year, an amount which did not vary with the number of hours she worked. Consequently, her income did not decrease after she reduced her work hours.

At the time of the accident, Elreg had no formal short or long-term disability/income continuation plan for its employees. Mr. MacDonald testified that prior to Mrs. Zirger's accident, Elreg had only dealt with short-term employee absences which did not exceed more than a couple of days. He and Richard Zirger exercised their discretion in deciding whether to pay an employee for time off work, but he could not recall reducing an employee's pay for absence due to illness.

Commercial Union did not dispute that Mrs. Zirger suffered soft tissue injuries to her neck and right shoulder as a result of the accident, nor that these injuries included an impingement of her right shoulder which subsequently required corrective surgery. Mrs. Zirger did not return to work after the accident until the end of January 1996. Commercial Union conceded that she was unable to perform her job during this period. She initially worked only 2 hours per day, gradually increasing her hours to approximately 4.5 hours per day, 5 days per week, commencing August 1996. Both parties agreed that she maintained these hours until her surgery on May 14, 1997, when she stopped work altogether. Commercial Union conceded that Mrs. Zirger was unable to perform her job for a period of no more than 12 weeks, while she recuperated from this surgery. Approximately three months after her surgery, she attempted to do a desktop publishing project for Elreg which she performed at home. However, another employee had to complete this project. Other than this, Mrs. Zirger has not returned to work at Elreg, or to any other form of employment since her surgery. She asserts that severe neck and right shoulder pain, and headaches continue to disable her from performing the essential tasks of her job. In 1997, Elreg hired another person to assume Mrs. Zirger's position. This person worked part time for about four months, before commencing full-time employment (8 hours per day) at a salary of approximately $40,000 per year. Prior to hiring this replacement worker, Elreg also contracted with a consultant for a six-month project which Mrs. Zirger says she would have done, had she been able to work.

After the accident, Elreg continued to pay Mrs. Zirger's salary in the same manner as it did prior to the accident. This arrangement has continued to date. Elreg continues to include Mrs. Zirger as a salaried employee on the company payroll, and makes all the usual source deductions and tax remittances. Mrs. Zirger has reported these payments as employment income in her annual tax returns filed with Revenue Canada. Mrs. Zirger asserts that she and her husband discussed her situation shortly after the accident, and arrived at the decision to continue her salary until she received payment of her IRBs, at which time she would repay the amounts to Elreg. It is agreed that Elreg's accounting records do not make any provisions for a loan, nor is there any written agreement or promissory note to evidence such a loan arrangement. Mrs. Zirger submitted an application for accident benefits which was received by Commercial Union on October 11, 1996, in which she claimed IRBs. However, Commercial Union has never paid this benefit, adopting the position that she has continued to receive employment income which is deductible from any IRBs otherwise payable and reduces the amount owing to zero. As she has not received payment from Commercial Union for IRBs, Mrs. Zirger has not returned any money to Elreg.

Questions to be addressed:

1. Are the monies paid by Elreg to Mrs. Zirger after the accident, employment income and therefore deductible from IRBs, pursuant to section 10(3) of the Schedule, or a loan? This issue calls into question the interpretation of employment in sections 5 and 10 of the Schedule. Is employment income defined by the structure of the income received, or must an insured person earn the income? If the latter, can an insured person earn income even though he or she is not actively engaged in employment?

2. If I find that the continued payment of her salary is properly classified as a loan, what remuneration should be attributed to Mrs. Zirger when she did work? Mrs. Zirger asserts that her income should be calculated on an hourly basis, at an hourly rate reflective of the rate paid to her prior to the accident. Commercial Union asserts that her full salary should be attributed, irrespective of the number of hours worked.

3. If I find that the monies are neither employment income nor a loan, are they deductible pursuant to section 75 of the Schedule? Specifically, are they payments for loss of income that have been received by Mrs. Zirger under an income continuation plan?

4. Other than the periods of disability conceded by Commercial Union, has Mrs. Zirger at any time been substantially disabled from performing the essential tasks of her employment?

Meaning of "employment":

Mrs. Zirger argues that, for the periods where she did not work at all, no income should be attributed to her.

Pursuant to subsections 10(3) and (4) of the Schedule, an insurer may deduct post-accident employment income from IRBs otherwise payable. This section provides:

(3) The insurer may deduct from the amount of the weekly income replacement benefits payable to an insured person a percentage of the net income received by the insured person in respect of any employment subsequent to the accident.

(4) The percentage mentioned in subsection (3) shall be,

(a) 75 per cent, if the insured person started the employment more than twenty-six weeks after the onset of the disability in respect of which the weekly income replacement benefits are paid and has been engaged in the employment for less than twenty-six weeks; a and

(b) 90 per cent, in any other case.

Employment is defined in section 5 of the Schedule:

For the purpose of this Regulation, a person is employed if, for salary, wages, other remuneration or profit, the person is engaged in employment, including self-employment, or is the holder of an office, and "employment" has a corresponding meaning.

Mrs. Zirger asserts that employment income can only be attributed to her during those periods when she actually worked. She argues that the phrase "engaged in employment" [emphasis added] requires that an insured person actually perform the tasks of the employment, and does not refer merely to the status of being employed. She maintains that if she did not perform employment tasks, she is not employed within the meaning of the Schedule. Therefore, during the periods she did not work, any payments she received after the accident do not constitute income from employment. Counsel for Commercial Union argues that the requirement that an insured person actually perform work tasks is not expressly stated in section 10. He emphasized that employment includes being "the holder of an office," and that some employment situations do not require that a person perform employment tasks in any specific time period, in order to be paid an income in respect of that time period. He cites as examples, persons like Mrs. Zirger who receive a fixed salary irrespective of hours worked, and individuals who receive retainer fees.

In decisions under the previous version of the Schedule, both the Director and the Director's Delegate determined that employment, for the purpose of determining weekly benefit entitlement, was not limited to periods actually worked.² In Tustin and Canadian General Insurance Group,³ Director's Delegate Draper concluded that the analysis utilized in these prior decisions applied to the current version of the Schedule. I am bound by his decision and therefore conclude that "engaged in employment," refers to the status of being in an employer/employee relationship, or being self-employed. An insured person is not required to be actively performing work tasks in order to be considered employed for the purposes of the Schedule.

In every case an insured person's employment status will be a question of fact. Each case must be determined on its own merits. In this case, Mrs. Zirger clearly had an ongoing relationship with Elreg after the accident, and so the payments she received after the accident could be considered income received in respect of employment. Therefore, I must determine whether these payments were advanced as a loan. Also, even if she and Elreg intended a loan arrangement, does the structure of the payments preclude characterizing them as anything other than employment income, for the purposes of the Schedule?

Did Mrs. Zirger enter into a loan arrangement with Elreg?

Mrs. Zirger's evidence was straightforward. I found her to be a credible witness. She testified that she and her husband, Richard, discussed her situation and arrived at the decision to have Elreg continue to advance her salary to her until she received benefits from Commercial Union, at which time Elreg would be repaid.

Commercial Union did not initiate payments upon receipt of Mrs. Zirger's application for benefits, ostensibly because she had indicated that she was self-employed, thus prompting further investigation of her claim. Irrespective of the reason, Mrs. Zirger was left without income replacement benefits, while she was unable to work. Commercial Union argued that her husband's income was substantial, and therefore she suffered no financial hardship. Even if this is the case, it is irrelevant to the issue before me. Mrs. Zirger's ability to earn employment income was interrupted by a motor vehicle accident. Since IRBs were not paid, I find that it is entirely reasonable and plausible that she and her husband would implement the loan arrangement in order to avoid the financial consequences occasioned by her inability to work. Commercial Union argued that this might be so, if the arrangement had been an interim, short-term measure. Commercial Union emphasizes that Mrs. Zirger and Elreg did not change the arrangement after being notified that Commercial Union took the position that the payments were post-accident employment income. Commercial Union therefore argues that this long-term arrangement is not consistent with Mrs. Zirger's assertion that it was an interim measure. I do not agree. If anything, this sustained practice establishes a pattern of consistency which supports the credibility of Mrs. Zirger's assertions.

I also do not accept Commercial Union's argument that Elreg would never have initiated post-accident payments if Mrs. Zirger had truly intended to claim weekly benefits. However, if Elreg's intention was to continue her income, why would Mrs. Zirger have applied for income replacement benefits? There is nothing unreasonable in Mrs. Zirger wishing to continue to receive funds until such time as her weekly benefits were paid. She is fortunate to have a special relationship within this business structure which afforded her consideration which most arm's length employees do not receive. Also, it could be argued that Commercial Union's failure to pay IRBs prompted and perpetuated the loan arrangement with Elreg. I do not accept Commercial Union's submission that Mrs. Zirger's inclusion of a claim for weekly benefits in her application for benefits, evidences nothing more than a pro forma application for every type of benefit possible. I find that her application for benefits supports a bona fide intention to claim IRBs.

Mr. MacDonald, as a shareholder in Elreg, is entitled to receive a share of the company's profits. Accordingly, his financial interests are negatively impacted by Elreg's arrangement to continue paying Mrs. Zirger's salary. He testified that he spoke with Richard Zirger in January 1996, when it was agreed that Elreg would continue to keep Mrs. Zirger on the payroll, in his words "in the form of a loan if you will," and once her case with the insurance company was settled, the funds would be returned to the company. He readily agreed in cross-examination that it was odd that the loan was never documented on the books.

Commercial Union submitted that this meeting constitutes compelling evidence that the Zirgers were attempting to reclassify the payments as a loan, in circumstances where the payments to that date were intended as employment income. I do not agree. I found Mr. MacDonald to be a straightforward and credible witness. He confirmed that he and Richard Zirger discussed the problem of Mrs. Zirger's (by then) prolonged disability, and the continued payments being made to her. He confirmed his understanding at the meeting that they would keep Mrs. Zirger on the payroll, with the payments being made as a loan. Once the case was settled, those funds were to be returned to the company. I find Mr. MacDonald's evidence corroborates Mrs. Zirger's evidence on this point. Furthermore, I note that Commercial Union did not complete its investigation and confirm its position until July 10, 1996.⁴ When Mr. MacDonald and Mr. Zirger met in January 1996 to discuss the arrangements for Mrs. Zirger, she had not worked for almost four months. I received no evidence to indicate that they were at that time aware that Commercial Union considered the payments to be employment income. In fact, no evidence suggests that Commercial Union had reached this conclusion at that time. I find that it was reasonable for Mr. Zirger and Mr. MacDonald to have reviewed the matter, particularly as the payments had a negative impact on Mr. MacDonald's share in the business profits at that time.

Both parties referred to a letter written by Elreg's controller, Daniel Raphael, dated March 15, 1996.⁵ This letter confirms the loan arrangement. However, I found it of limited assistance. The letter was produced six months after the accident, and I agree with Commercial Union that it could be characterized as self-serving. On the other hand, I do not accept Commercial Union's assertion that this correspondence indicates that Elreg felt it was necessary to produce a document in order to bolster Mrs. Zirger's claim, again raising an inference that Elreg's true intention was to pay employment income. In her testimony, Mrs. Zirger described Ms. Raphael as the company accountant, and indicated that she had full knowledge of the arrangement for payments. Ms. Raphael's correspondence, therefore, corroborates Mrs. Zirger's evidence to some degree.

Commercial Union argues, however, that the payment structure itself constitutes compelling evidence of Mrs. Zirger's and Elreg's intention that she continue to receive employment income. Beyond this, Commercial Union argues that Mrs. Zirger is bound by the structure of payments, even if the payments were intended as a loan. In support of this contention, Commercial Union relied primarily on the principle enunciated in Bonitatibus and Wellington Insurance Company.⁶This principle provides that, although insured persons have the right to structure their affairs, within the law, in any manner they choose, they cannot inconsistently restate their income from employment so as to maximize their benefit under the Schedule.

Mr. Jeffery Smith, a chartered accountant, testified on behalf of Commercial Union. He was forthright in presenting his evidence. Although I do not question his professional competence, I find that his evidence did not add further insight to the issues at hand. He confirmed the structure of the payments received, and that nothing in the accounting records confirmed the loan arrangement. However, these facts were already conceded by Mrs. Zirger. Mr. Smith indicated that consistency in accounting principles would suggest that the payments be treated as employment income. I asked him to describe the accounting principles (if any) which could apply, should Mrs. Zirger receive weekly benefits and subsequently repay funds to Elreg. He indicated that the payment would be shown as a form of income received by Elreg at the time of payment, rather than having the accounting records retroactively varied to change the structure of past payments (the latter approach being inconsistent with Revenue Canada policies). I concluded from this response that the loan arrangement, as asserted by Mrs. Zirger, could be accommodated within the parameters of standard accounting principles, even though obviously it was not the preferred approach. Accordingly, I am unable to find that the structure of the payments, based on accounting principles alone, conclusively characterizes the payments as employment income.

Mr. Smith expressed the opinion that the payments were deductible as post-accident employment income pursuant to subsection 10(3), referring to the principle cited in Bonitatibus. However, I received no indication that he considered other relevant principles which have been applied in previous arbitration decisions. In his report,⁷ he concluded: "Whether or not Mrs. Zirger pays her wages back to Elreg is irrelevant for IRB purposes." I note, however, that this is not an opinion respecting the proper interpretation and application of accounting principles. This observation constitutes an interpretation of the provisions of the Schedule respecting the very issue I must decide. Consequently, I place limited weight on this aspect of his evidence. I find that the strength of Mr. Smith's testimony lies in his clarification of the accounting practices adopted by Elreg, and how they relate to the issues at hand. However, as I have already noted, this evidence was already conceded by Mrs. Zirger. Therefore, I have not accepted his conclusion that the payments made to Mrs. Zirger are deductible pursuant to subsection 10(3) of the Schedule.

I accept the following two propositions. First, insured persons may not retroactively restructure their pre-accident financial arrangements, in order to maximize the quantum of their IRBs. Secondly, where an insured person returns to the employment he/she held at the time of the accident, then post-accident employment income should be calculated using the same approach which was adopted in calculating his/her pre-accident net weekly income.⁸

I find, however, that neither of these propositions has direct application to this case. Here, a closely-held corporation, which had no formal income continuation policy, had to cope with an employee's prolonged inability to work due to disability. This is not a case where Mrs. Zirger is seeking to restructure her pre-accident income in order to increase the quantum of her benefit, nor has she argued that her post-accident income should be less than her pre-accident income if she worked the same number of hours.

Although the circumstances of this case are somewhat unique, arbitrators have previously addressed the issue of determining employment income earned by an insured person within the context of a closely-held corporation and/or family-run business. I summarize some of the principles which have been applied. (In reviewing these cases, it should be remembered that the previous version of the Schedule appears to contemplate a broader definition of post-accident employment income which may be deducted. Section 15 of the previous Schedule provides for deduction of income "received or available' [emphasis added].⁹ Subsection 10(3) of the current Schedule refers only to income "received."

1. The treatment of income as income from employment for purposes of the Schedule, depends on the particular facts of the case.¹⁰

2. 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. Changes to the form of an insured's financial affairs may be permitted where there is satisfactory evidence that the change would more accurately represent the insured's true financial situation.¹¹

3. While an insured person's income tax returns are prima facie proof of income, they are not conclusive of the issue of whether payments received are employment income.¹² However, the insured person bears the onus to present reliable and cogent evidence to overcome the prima facie presumption.¹³

4. Receipt of income for the purpose of reducing a spouse's tax liability will not be treated as employment income where work actually performed was without any commercial value.¹⁴

5. The Insurer bears the onus of establishing that an insured has received income in respect of employment subsequent to the accident.¹⁵

Commercial Union urged me to find that an additional consideration applies. It argued that Mrs. Zirger will receive double recovery if she is awarded IRBs, and that this should lead me to characterize the post-accident payments as employment income. I do not accept this submission. First, on the facts, there appears to be limited potential for double recovery (if any), as Elreg hired replacement workers to perform Mrs. Zirger's work. In particular, a permanent full-time employee was hired in August 1997, to replace Mrs. Zirger. Commercial Union's counsel nonetheless argued that repayment of funds would increase Elreg's profits. However, this submission ignores the fact the Elreg's profitability has been less that it would have been since the accident, because Elreg has made payments to both Mrs. Zirger and replacement workers. Commercial Union has not asserted that Mrs. Zirger's share of Elreg's profits (in whatever form she received them) were income from self-employment. The ultimate and practical effect of Commercial Union's double recovery argument, is to urge me to find that if monies repaid to Elreg come back to Mrs. Zirger in the form of business profits, this should constitute part of her post-accident income. However, business profits have not been included in the calculation of Mrs. Zirger's pre-accident net weekly income. Therefore, this approach would be contrary to the principles enunciated in Bonitatibus and Kotak. Furthermore, as a matter of general policy, it must be remembered that benefits payable under the Schedule are a form of disability insurance. Mrs. Zirger is entitled to access these benefits if she is disabled, irrespective of the impact that her receipt of these benefits may have on Elreg's profitability.

Previous arbitration decisions demonstrate considerable flexibility when ascertaining the substance of an insured person's financial situation. In James,¹⁶ one-half of the profits of a family-run franchise operation continued to be allocated to the applicant after her accident. She declared this income for tax purposes on the advice of her accountant, even though this did not reflect income earned as a result of her active participation in the business. The arbitrator rejected the applicant's argument that no post-accident income should be attributed to her. He noted that (unlike Mrs. Zirger's case), the calculation of her weekly benefit included both earned income and income from investment and planning (i.e. business profits from the franchise). He further observed that both before and after the accident, the franchise operation continued essentially as a partnership with the applicant's husband, where one-half of the profits were at the applicant's disposal.

In Piper,¹⁷ the arbitrator concluded that the applicant was entitled to treat draws on retained earnings as employment income for the purpose of calculating his weekly income benefits. The arbitrator did so even though she accepted that these draws did not reflect income earned at the time the draw was made. She found that the applicant had a specific intention to average his income over the long term, by retaining within the company income which was earned in earlier more profitable periods, to be paid out as salary in less profitable periods. She did not, however, attribute any post-accident income to the applicant even though draws were available to him. She found that during the period the applicant was unable to contribute his skills and experience to [the company] due to his injuries, the insurer, rather than the company, should bear the responsibility for maintaining the applicant's salary at its pre-accident level. The arbitrator's analysis and conclusions were affirmed on appeal.

While the facts in Piper are different from the circumstances in this case, I find that there are relevant parallels. While Mrs. Zirger was not the controlling mind of the company, she nonetheless played an important role in supporting its development. Due to her accident-related injuries, she has at times been unable to contribute her support and skills. Following the rationale in Piper, I find that Commercial Union, not Elreg, should bear the responsibility for maintaining Mrs. Zirger's salary. The fact that the company could continue to provide income to Mrs. Zirger, does not automatically lead to the conclusion that she has received employment income for the purposes of the Schedule.

As noted in James, I am obligated to look beyond the form of the financial arrangements reached between Elreg and Mrs. Zirger. The onus is on Mrs. Zirger to present reliable and cogent evidence to overcome the prima facie presumption created by the structure of the payments she has received. I find that she has done so. She provided a reasonable explanation of the arrangement into which she and her husband entered, evidence which has been corroborated by Mr. MacDonald. I received no evidence which would lead me to doubt their testimony.

Commercial Union has not contradicted this evidence by anything other than pointing to the structure of the payments themselves. As already noted, this structure, though prima facie evidence, is not conclusive of the issue. I find that Mrs. Zirger has established that she and Elreg entered into the loan arrangement as she has described, notwithstanding that the loan was never reduced to writing. Accordingly, I conclude that the receipt of the regular weekly payments made after the accident, is not determinative of Mrs. Zirger's post-accident employment income. Certainly, for the periods when she did not work at all, I find that she did not receive income which is deductible pursuant to subsection 10(3).

Income while working:

Precisely what amounts of money should be attributed to Mrs. Zirger as post-accident employment for the periods of time when she did work? Mrs. Zirger argues for a determination based on the number of hours she worked, paid at the average hourly rate paid to her prior to the accident. This average hourly rate would be calculated using the reduced number of hours she worked immediately preceding the accident. Commercial Union has not disputed Mrs. Zirger's summary of the dates and number of hours she worked post-accident.¹⁸ However, it emphasized that Mrs. Zirger was paid a fixed weekly salary prior to the accident without consideration of the hours actually worked. Commercial Union argues, therefore, that this full weekly salary should be attributed to her in any week which she worked post-accident irrespective of the number of hours she worked. Commercial Union asserts that to do otherwise would change her method of calculating post-accident income (i.e. from fixed salary to hourly rate) for the purposes of maximizing her entitlement to benefits. Commercial Union alternatively argues that should an hourly rate be used to determine post-accident income, then the quantum of Mrs. Zirger's weekly IRBs should also be calculated at an hourly rate. Commercial Union asserts that this hourly rate should be based on full-time hours, rather than the reduced number of hours worked at the time of the accident.

The Schedule offers no guidance on this issue. While I find that I should be guided by the pre-accident practices at Elreg, the arrangement was informal. Mrs. Zirger's disabilities pre-and post-accident were very different. Because there were no rules in place, I must exercise my discretion to select an approach which produces a fair result. It is clear, however, that I should avoid attributing post-accident employment income for work that was without commercial value,¹⁹ where Mrs. Zirger did not engage in meaningful work for the business after the accident for which she should reasonably expect compensation.²⁰

I find that neither approach advanced by the parties is satisfactory. I agree with Commercial Union that Mrs. Zirger's approach offends the principles enunciated in Bonitatibus and Kotak. I also agree that if an hourly rate is to be used post-accident, it should also be applied to determine Mrs. Zirger's net weekly income pre-accident. This, however, would raise difficulties, as the evidence is unclear as to the number of anticipated work hours which were considered when determining the annual salary. Mrs. Zirger testified that she historically worked a regular work week, but also routinely worked extra hours on weekends. Therefore Mrs. Zirger's approach, while uncomplicated on its face, does not allow for a straightforward calculation of her post-accident income.

On the other hand, Commercial Union's method also presents difficulties. I find that Mrs. Zirger's pre-accident salary arrangement, where she was paid an unreduced salary, was nonetheless predicated on her ability to perform a significant portion of her employment responsibilities. There is no indication in the evidence that Elreg intended to pay Mrs. Zirger a full salary when she could not work at all, or could contribute only drastically reduced hours where her efforts were primarily for the purpose of rehabilitation. If anything, the loan arrangement confirms that Elreg was not prepared to continue her salary on the same basis as it had pre-accident. To allocate her full salary in such circumstances, would, in my view, require that I attribute income for work which was without commercial value.

I find that the pre-accident arrangement was to continue Mrs. Zirger's full salary as long as she was making a significant contribution to the company. I have found that her pre-accident salary was paid on the basis that she worked five hours per day in the normal work week,²¹ which leads me to conclude that this level of effort was considered by Elreg to be productive. I accept Mrs. Zirger's evidence that her efforts, after her initial return to work in January 1996, were primarily rehabilitative in nature and not commercially productive. I conclude, therefore, that she was not in a position to perform meaningful work until August 12, 1996, when she increased her work efforts to 4.5 hours per day. Accordingly, I attribute her full salary as post-accident employment income from August 12, 1996, to May 14, 1997, when she stopped working altogether. I heard little evidence respecting Mrs. Zirger's attempt to work from her home after her shoulder surgery. From the description I received, it appears that this attempt was not commercially productive. Therefore, I attribute no income for this work. However, it is unnecessary for me to determine this, as I have found that she ceased to be substantially disabled before she commenced this project.

In light of my findings, I confirm that the proper approach to determine Mrs. Zirger's IRBs, is to base her pre-accident net weekly income on her annual salary converted to a weekly amount. This is the approach used by the parties in arriving at the agreed quantum of $389.45 per week. Therefore, I find that this amount is the correct quantum.

Are the payments received by Mrs. Zirger deductible as payments made under an income continuation plan?

Commercial Union did not aggressively argue this issue, advancing its argument only as an alternative to its main contention that the payments were employment income. I find that the payments are not deductible under subsection 75(1). There is no evidence to suggest that Elreg had an income continuation plan (reduced to writing or otherwise) in place at the time of the accident to compensate employees for prolonged absences from work due to disability. Also, I have already found that Mrs. Zirger's pre-accident salary was paid on the basis that her work was commercially productive. There was no suggestion in the evidence that Mrs. Zirger was in fact paid a reduced salary prior to the accident which was being supplemented by a disability payment to maintain her full salary. I cannot find that the post-accident payments were made under an income continuation plan where clearly no such plan existed at the time of the accident. I have considered that subsection 75(1) may contemplate income continuation plans which come into existence after an accident. However, I have already found that the payments were advanced as a loan. By definition, monies which must be repaid, cannot be characterized as continuing an insured person's income.

Has Mrs. Zirger been substantially disabled from performing her essential tasks at any time since the accident?

Substantial Inability: Essential Tasks:

The essential tasks of Mrs. Zirger's employment were described in detail in a jobsite analysis and evaluation report prepared by a rehabilitation consultant.²² This analysis was not disputed by either party. It describes Mrs. Zirger's essential tasks as she performed them at the time of the accident. She had not adopted any modifications to accommodate her pre-accident fibromyalgia, other than to reduce her work hours. In summary, Mrs. Zirger spent a significant portion of her work week sitting at her desk using a computer, a scanner, and graphics software to produce catalogue pages showing automotive parts with accompanying typewritten product descriptions and sales information. Her work required extensive use of the computer mouse, as opposed to prolonged keyboard entry. This is noteworthy, as manipulation of the mouse does require the use of shoulder muscles. However, after the accident, Mrs. Zirger was provided with a mouse which she could drive with her thumb, in order to alleviate this strain.²³

The other major aspect of Mrs. Zirger's job was to compile the promotional catalogues. To do this, Mrs. Zirger would photocopy, collate, and 3-hole punch the pages, and place them into binders. She confirmed that the computer graphics work occupied the majority of her time. Time spent producing the catalogues would vary, but, on average, required three-quarters to one full day per week. Mrs. Zirger's job also involved some overhead lifting and reaching to obtain supplies from shelves, as well as bending to remove copies from the photocopier. After the accident, the rehabilitation consultant made accommodation recommendations to relocate items, in order to alleviate Mrs. Zirger's problems. Changes to the work site were implemented, and I received no evidence to suggest that these were inadequate, or that further adaptations were requested, but not implemented.

The lifting demands of the job were light. The job site analysis confirms that Mrs. Zirger was only required to lift up to 4 kg. She performed some other administrative/secretarial duties, but these did not involve heavier work. Mrs. Zirger also assisted when the company conducted quarterly warehouse inventory counts. Due to the limited frequency of this task, I do not consider it essential. In any event, she worked with another person, when checking inventory, and her main function was to record stock counts, not move auto parts. Mrs. Zirger occasionally would have to retrieve an auto part, in order to photograph it for the catalogue. If a photo was not already available, she would get assistance from one of the other employees if the part was heavy. There was some stress involved in Mrs. Zirger's job, in that she would at times have to adhere to deadlines in producing special sales information or other promotional materials.

As already noted, Mrs. Zirger stopped working a full 40-hour work week, when she was diagnosed as suffering from fibromyalgia in 1994. She asserted that she worked 6.5 hours per day at the time of the accident. In support of this calculation, she described in detail the time spent in the various rehabilitation treatments which took her away from the office during her work day. However, there is conflicting evidence on this point. The rehabilitation consultant met with Mrs. Zirger in January 1996, in order to clarify a misunderstanding respecting her work hours. The consultant confirmed that Mrs. Zirger advised that she worked 5 hours per day, 5 days per week, plus some extra occasional hours for a total of 30 hours per week.²⁴ Also, a questionnaire was completed for the purposes of a functional ability evaluation, in which she indicated that she worked 5.5 to 6 hours per day, 5 days each week.²⁵ Mrs. Zirger testified that she worked some overtime hours as required, which is consistent with the consultant's report. I find that Mrs. Zirger's hours likely varied somewhat from day to day given the flexible nature of her work arrangement. I prefer the evidence provided in the consultant's report and the questionnaire, as they were more contemporaneous with the accident. I find, therefore, that Mrs. Zirger worked five hours per day, Monday to Friday, with up to five more hours if required outside normal business hours.

Substantial Inability: Medical Evidence

Mrs. Zirger's pre-accident fibromyalgia has not seriously complicated the evaluation of her post-accident disabilities. Rheumatologist Dr. D. McNeely assessed Mrs. Zirger both before and after the accident. In July 1994, he found that she demonstrated widespread pain, including pain in her neck and across the top of her shoulders into her arms. However, he noted that this was a symmetrical problem. When he assessed her in November 1996, he noted that her major complaint was entirely different as it was regionalized to her right neck, shoulder and arm.²⁶

He also found her pre-existing fibromyalgia to be clinically at a lower level in 1996, than when he assessed her in 1994. In his 1996 assessment, Dr. McNeely also noted that Mrs. Zirger reported that she suffered from non-stop headaches which had only been occasional prior to the accident.

There is no question that Mrs. Zirger was motivated to resume her employment.²⁷ She returned to work in January 1996, as part of her rehabilitation program. She began by working 2 hours per day, gradually increasing her daily hours until she commenced working 4.5 hours per day as of August 12, 1996.

Mrs. Zirger has received varied and extensive therapeutic interventions since the accident. After the accident, she continued to be followed by her family physician, Dr. G.W. Thomson. She received physiotherapy treatment involving various modalities provided by Columbia Rehabilitation, from October 1995, to August 1998. (She took daily treatments at this clinic up to June 1996). She also pursued massage and therapeutic pool therapy. An attempt at chiropractic intervention in February 1996, failed as it only served to aggravate her pain. On May 22, 1996, she began osteopathic treatment with Dr. Iris Marshall (who was associated with Columbia Rehabilitation), and she has continued under her care since that time. Dr. Marshall referred her for cranial osteopathy (a form of manipulation of the head and neck), which was performed by Dr. G. Vanderpol from June 1996, to May 1997. Sometime in 1996, Mrs. Zirger developed temporomandibular joint pain. Treatments in 1996 resulted in only marginal improvement. Mrs. Zirger underwent a functional abilities evaluation in September 1996, and subsequently reported that her shoulder pain increased after this assessment.

At the suggestion of Dr. D. Mehta, a rheumatologist who conducted an insurer examination in October 1996, Mrs. Zirger was referred to orthopaedic surgeon, Dr. P. Welsh, for review of her shoulder problem. She initially saw him in January 1997. After conducting an arthrogram, he first attempted to alleviate her problem by steroid injection. When her condition did not improve, he ultimately concluded that she had an impingement of her right shoulder which required surgical intervention. He referred her to Dr. R. Holtby, who, on May 14, 1997, conducted a procedure known as a subacromial decompression. Dr. Holtby identified and repaired the impingement. He noted that Mrs. Zirger had minimal damage to the rotator cuff, and that with relief of the impingement, her symptoms should resolve. However, in his pre-surgical assessment, he stated that Mrs. Zirger would have "a stormy recovery based on her history of fibromyalgia, but hopefully will be improved over a four to six month period." He reviewed her condition on June 25, 1997, and commented that "she should make a full recovery over the next six weeks or so."²⁸ Although Dr. Holtby indicated he would see her again in six weeks, a further consultation did not occur.

Just prior to her surgery, Mrs. Zirger participated in a Supplementary Medical and Rehabilitation assessment by a Designated Assessment Centre (DAC)²⁹ which included a physiotherapy assessment. It was recommended that Mrs. Zirger progress to an independent home exercise program eight weeks after having her shoulder surgery.

Mrs. Zirger did not find that the surgery was helpful in relieving her symptoms, and reported to her physicians that her right shoulder pain and restricted range of motion continued to be a major problem. In January 1998, she attended a naturopathic therapeutic institute in Florida. She stated that detoxification was one of the major benefits she derived from this treatment. She was gradually able to discontinue all use of extra strength analgesics, as well as her use of anti-depressants. Upon her return to Canada, Mrs. Zirger continued with Dr. Marshall, who eventually referred her for laser therapy for her shoulder. By March 1999, her right shoulder pain and range of motion had improved significantly. Dr. Thomson, in his report dated March 17, 1999.³⁰ noted that symptoms in the right arm were rare. However, in her report dated March 17, 1999.³¹ Dr. Marshall noted that Mrs. Zirger indicated that she still was unable to do computer work because she would develop pain in her right shoulder (and would get a headache as well). Both Drs. Marshall and Thomson note that, in late 1998 to early 1999, Mrs. Zirger began to develop pain in her left arm. Dr. Marshall described this as an overuse injury which is the likely result of

Mrs. Zirger increasing her activities with her left hand in order to reduce demands on her right arm. Dr. Marshall also noted Mrs. Zirger's complaints of continuous and frequent headaches (4 to 6 days per week).

A further Supplementary Medical and Rehabilitation DAC assessment was conducted on March 26, 1999, by the same facility which conducted the DAC assessment in April 1997. As of March 1999, the DAC concluded that:

(i) Although Mrs. Zirger's cervical spine symptoms are generally quiescent, she continues to have evidence of significant cervical region hypomobility;

(ii) Mrs. Zirger's conservative management program has been successful in minimizing her right shoulder pain, and she has had a 90% recovery to date;

(iii) Mrs. Zirger has developed left shoulder pain due to overuse in compensation and minimizing use of her right shoulder and arm, requiring further physiotherapy intervention over 14 weeks, followed by implementation of a home exercise program;

(iv) Mrs. Zirger has secondary temporomandibular jaw discomfort and a TMJ pain syndrome (six weeks of further physiotherapy being recommended).

Mrs. Zirger has submitted to several assessments to evaluate her functional capacity, for the purposes of determining whether she is capable of performing her job. On September 4 and 5, 1996, a functional abilities evaluation (FAE) was conducted by a physiotherapist and a kinesiologist and they concluded that Mrs. Zirger had the strength and endurance to perform the essential tasks of her job, and that there were no physical contraindications for her return to work.³²

Dr. P. Welsh commented on Mrs. Zirger's ability to work in correspondence prepared after the initial arthrogram. Pending his determination of the necessity for rotator cuff surgery, he encouraged the regular use of the shoulder. He noted that, while Mrs. Zirger would be troubled by ongoing shoulder pain, she was not inherently incapable of working at some aspects of her desktop publishing enterprise.³³

On April 7, 1997, Mrs. Zirger participated in a Disability DAC assessment conducted by physiatrist Dr. K. Bowler. While he reviewed the results of the September 1996 FAE, this assessment also included a separate functional abilities evaluation which was performed by a kinesiologist. Dr. Bowler concluded that, although Mrs. Zirger's condition had not improved since she started working, there had been no significant deterioration as a result of her part-time work. He found that she did not suffer a substantial inability to perform the essential tasks of her employment, but did have some specific isolated difficulties with photocopying tasks and lifting heavier objects. The kinesiologist confirmed that Mrs. Zirger was practically assessed for the functions of a desktop publisher. He concluded, despite inconsistencies in her presentation and her reported inability to complete fitness testing due to fatigue, that she had demonstrated the ability to perform her job.

On September 11, 1998, orthopaedic surgeon, Dr. H. Cameron, conducted an insurer medical examination (IME). His report³⁴ confirms no evidence of an impingement in her right shoulder. He noted that the expected duration of disability following an acromioplasty is a few weeks or months at best. He discounted the efficacy of Mrs. Zirger's osteopathy treatments. He concluded that Mrs. Zirger had recovered to the extent that she could return to her former occupation should she so desire.

Mrs. Zirger's counsel conceded that Mrs. Zirger has not adduced health practitioner assessments which addressed the specific issue of whether she could perform the essential tasks of her employment. The closest evidence on this point is the comment made by Dr. Marshall in her 1999 report, in which she states that Mrs. Zirger "used to do computer graphic work but is unable to do this because it increases the pain in her right shoulder." However, as I read this report, Dr. Marshall, as a treating physician, was confirming Mrs. Zirger's subjective reports respecting her functional limitations, as opposed to providing her own evaluation and opinion on the disability test.

I accept that Mrs. Zirger suffered the injuries described above, and that I must consider her left arm difficulties, when assessing her ability to work. I have not considered her TMJ problem in this assessment, as Mrs. Zirger agreed in cross-examination that this aspect of her condition did not prevent her from performing her job.

I do not doubt Mrs. Zirger's sincerity or her motivation to return to work. I accept her evidence that her shoulder problems and headaches made working difficult for her. However, an insured person's own views respecting her functional disability, although sincere, are not determinative of entitlement.³⁵ There is nothing inconsistent in an arbitrator concluding that someone is genuinely experiencing pain, but overestimating its impact on his or her functional abilities.³⁶While I have given serious consideration to Mrs. Zirger's assertion that her pain prevents her from working, this subjective assessment must nonetheless address the disability test set out in the Schedule.

In this case, the test is not whether Mrs. Zirger could perform her job in the same manner as a healthy person working full-time hours. The test is whether she can perform the job at reduced hours, in the same manner as she did before the accident³⁷, i.e. as a person who struggled to cope with chronic pain and headaches.

Job flexibility is an important consideration in assessing Mrs. Zirger's entitlement to weekly income benefits. Where it is realistic and reasonable for an insured person to complete essential tasks with minimal assistance, or to accomplish such tasks in a different way, then the insured person may not be assessed as being substantially disabled.³⁸ Mrs. Zirger had considerable flexibility when performing her job duties, both in scheduling her work hours, and in ordering her job tasks to alleviate repetitive strain. I received no evidence to indicate that Mrs. Zirger was unable to interrupt her sessions working at her computer terminal, either by taking frequent rest periods, or by performing some of her other duties, such as assembling catalogues, or photocopying.

Subject to one exception, the evidence indicates that the work station accommodations recommended by the rehabilitation consultant, assisted Mrs. Zirger in the performance of her job. Mrs. Zirger indicated that someone else performed her photocopying duties due to the awkward position of the photocopier which could not be altered due to space constraints.³⁹ Clearly, the delegation of one of the important duties of her job cannot be characterized as a form of work accommodation which is contemplated under the Schedule.⁴⁰ However, I received no evidence to suggest that this particular problem was identified to the rehabilitation consultant who implemented the other job site modifications. Nor did I receive any evidence that the problem could not be rectified, for example, by acquiring a more compact model of copier, or by effecting structural alterations to the office space. Mrs. Zirger's right shoulder and arm function has improved, and I received no evidence that further reasonable accommodation measures would be impractical. Applicants who have flexibility in determining methods of work, as Mrs. Zirger has, are expected to take advantage of this flexibility in reasonably modifying their essential tasks to accommodate impairment.⁴¹

I also received no evidence to suggest that Mrs. Zirger's functional restrictions prevented her from satisfactorily meeting production deadlines when she was working post-accident. I further note that, for the most part, she was able to perform her work independently, so that she could pace herself without interfering unduly with the productivity of other employees. The question remains, however, whether her subjective pain experience remains functionally debilitating despite all reasonable work accommodation.

Commercial Union conceded that Mrs. Zirger satisfied the disability test in the period immediately following the accident, until she returned to work in late January. On the evidence, this is a reasonable conclusion. It is equally clear that Mrs. Zirger experienced a delayed recovery from her injuries, and that her initial return-to-work efforts were rehabilitative in nature. I received no evidence to suggest that she should have increased her work hours at a faster rate. A finding that an insured person can return to work on a graduated basis, does not preclude a finding of substantial functional disability. The test is not whether he or she could return to a less onerous job, or initially perform only the less demanding essential tasks of the occupation and gradually assume the remaining tasks over time.⁴² Therefore, I find that Mrs. Zirger continued to meet the disability test until August 12, 1996, when she increased her work schedule to 4.5 hours per day. I have already found that her work was commercially productive at this level, and approximated her pre-accident five-hour work day. She may not have been as fully productive as she had been prior to the accident, and no doubt her pain experience was more severe.

However, the evidence suggests that her performance was sufficiently close to her pre-accident level. Accordingly, I cannot find that she was substantially disabled from performing her job as of August 12, 1996. This conclusion is reinforced by the objective opinion provided in the FAE which was completed only three weeks later, and which indicated that Mrs. Zirger was fully capable of performing her job duties, notwithstanding her pain problems.

The next question is whether Mrs. Zirger was unable to continue working due to her shoulder surgery and/or other accident-related factors since that time.

Commercial Union has conceded that Mrs. Zirger met the disability test during the period of her post-operative recuperation, which covers the period from May 14, 1997, to August 6, 1996. I find that this is a reasonable conclusion, as it was based on Dr. Holtby's assessment on June 12, 1996, wherein he estimated full recovery within six weeks. Mrs. Zirger adduced no evidence to indicate that she did not enjoy a full recovery from the surgery, or that her recovery was delayed.

When assessing functional disability, it is important to consider actual work performance which occurs after the accident. A rebuttable presumption that an insured person does not continue to be substantially disabled, will arise in circumstances where the insured person returns to work for a period during which he or she is able to perform the essential tasks of the job.⁴³ However, it has also been observed that this proposition should not be used to penalize persons who make legitimate efforts to return to work, but are unable to continue.⁴⁴ While Mrs. Zirger's surgery was an obvious setback, she has not established, on a balance of probabilities, that she has been substantially disabled from performing her job after she recovered from the effects of this surgery.

First, even though she found the surgery did not relieve her symptoms, I cannot infer from this that she was unable to perform her job. I note that Mrs. Zirger was able to work, albeit with difficulty, at near pre-accident performance levels for a period of nine months, even though she suffered from the shoulder impingement problem throughout this period. Dr. Marshall routinely assessed active and passive range of shoulder motion when she saw Mrs. Zirger in consultation. Her report indicates that some aspects of Mrs. Zirger's active range of motion had improved, while others had worsened, when she assessed her on August 20, 1997, as compared to her pre-surgical condition on April 16, 1997. The surgery was successful in releasing the impingement. Furthermore, the evidence clearly confirms that Mrs. Zirger's right shoulder condition has continued to improve since the surgery. The report of a 90 percent recovery is not consistent with her assertion of ongoing disability. I recognize that this improvement has occurred when she was not working. However, I received no evidence to counter Dr. S. Garner's evidence in his DAC report that her work efforts did not cause a deterioration in her condition. There is, therefore, insufficient evidence to suggest that the surgery significantly worsened or complicated Mrs. Zirger's ability to function beyond the post-operative recuperation period.

Secondly, four assessors have concluded that Mrs. Zirger had the capacity to perform her job. She has countered this evidence with only her own subjective view that she remains substantially disabled. I must give considerable weight to the evidence which shows that different health practitioners, at different times since the accident, have all arrived at the same conclusion that Mrs. Zirger is capable of performing her work. I have also considered that Dr. Marshall may have been expressing an independent opinion when she commented that Mrs. Zirger is unable to do computer work, (as opposed to merely confirming Mrs. Zirger's subjective report). However, I do not accept this opinion over those of the other assessors. It is clear from the reports that these assessments more specifically addressed the disability test. In the case of the FAE, and the Disability DAC which included a functional capacity evaluation, these assessments utilized performance testing, and linked the test results to the performance of the essential tasks of the job. Dr. Marshall's report provides only a conclusion with little indication of the analysis used to arrive at this determination.

Thirdly, I find that the evidence is insufficient to support a conclusion that the level of pain Mrs. Zirger experienced after the surgery was worse than prior to the surgery. I accept that she has continued to experience ongoing problems. However, the test is whether she can perform her job at reduced hours, in the same manner as she did before the accident, i.e. as a person who struggled to cope with chronic pain and headaches. Therefore, to the extent that Mrs. Zirger's post-accident condition approximates her pre-accident status, it will be difficult to establish that substantial disability continues. Mrs. Zirger reported that she suffered only occasional headaches prior to the accident. This is contradicted by an entry in the clinical notes of Dr. Thomson, who on October 5, 1994, noted that she was (then) still experiencing daily headaches from her neck region and pain to her arms.⁴⁵ While I do not question that Mrs. Zirger's current symptoms are accident-related, I note that her current condition more closely resembles the symmetrical symptom presentation observed by Dr. McNeely when describing her pre-accident condition. The regional problem on the right side has abated. Admittedly, Mrs. Zirger's TMJ condition did not exist prior to the accident, but Mrs. Zirger has conceded that this does not disable her from working. Consequently, it is difficult to accept that her level of pain after her post-surgery recuperative period, would be so markedly worse than it was just prior to her surgery. It is equally difficult to accept that this level of pain could be more debilitating than it was pre-accident, given that she was able to work for nine months at near pre-accident levels. Finally, I was unable to discern from Mrs. Zirger's evidence that she fully appreciated the distinction between her ability to perform her job as it exists now, and the reduced capacity test which I must apply to determine her entitlement. While I accept that she struggled to cope with the job prior to the surgery, her job demands were light. Because her hours were part time, she had considerable latitude in pacing her work activities and taking rest breaks.

In conclusion, I cannot prefer Mrs. Zirger's subjective self-assessment, over the evidence of the independent assessors, bearing in mind, the inference to be drawn from her actual work performance. Accordingly, I find that Mrs. Zirger has not established that she was substantially disabled from performing the essential tasks of her employment at any time after August 7, 1997.

Ancillary issue respecting Part 6 of the Schedule (Loss of Earning Capacity):

Commercial Union argued that IRBs are payable only up to September 20, 1997, which is the date when Mrs. Zirger first qualifies to receive an offer respecting loss of earning capacity under Part 6 of the Schedule. It asserts that benefits payable beyond this date are weekly loss of earning capacity benefits. In light of my finding that Mrs. Zirger's disability did not extend to September 20, 1997, it is unnecessary for me to address this issue. It was, however, argued at length before me. Subsequent to the hearing, Director's Delegate Draper issued his decision in Zehr and Canadian General Insurance Group.⁴⁶ In this decision, he stated:

The insured person's protection is found in s.64(13) of the SABS-1994. If it is determined that payment of the benefits should not have been stopped, the insurer is required to resume payment of the benefits and pay the benefits that were not paid. In my opinion, this suggests that up to the determination of entitlement, the insured person is to be compensated through weekly benefits. If the arbitrator eventually finds that the insured person continued to qualify for weekly benefits at the critical time, this would trigger the LECB provisions, but only prospectively. In other words, the insurer would then have to make an offer based on the insured person's current situation, followed by the DAC process, if necessary.

I find that this clearly resolves the issue, and I am bound by the Director Delegate's decision in this regard.

EXPENSES:

The parties agreed that they would return the question of expenses before me, in the event that they are unable to resolve this issue between themselves.

September 16, 1999

Dirk VanderBent Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 172

FSCO A97-001386

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JUDY ZIRGER

Applicant

and

COMMERCIAL UNION ASSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mrs. Zirger is entitled to receive weekly income replacement benefits, pursuant to section 7 of the Schedule, at the rate of $389.45 per week, for the periods from September 27, 1995, to August 12, 1996, and from May 14, 1997, to August 7, 1997.

2. Weekly payments (based on an annual salary of $30,000 per year) paid by Elreg Distributors Ltd. to Mrs. Zirger, during the periods from August 17, 1996 to May 14, 1997, qualify as post-accident employment income under section 10 of the Schedule (subject to adjustments prescribed under subsection(3), (4), and (5)).

3. The parties may return the issue of expenses before me, if they are unable to resolve this matter between themselves.

September 16, 1999

Dirk VanderBent Arbitrator

Date

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 and 303/98.
2. 2Madore and Co-operators General Insurance Company, (OIC P-004305, September 22, 1997) and Joyce and Co-operators General Insurance Company, (OIC P96-000014, March 4, 1997)
3. 3Tustin and Canadian General Insurance Group, (FSCO P99-0004, August 13, 1999)
4. 4Exhibit 14, Explanation of Assessment.
5. 5Exhibit 10, Letter from Elreg dated March 15, 1996.
6. 6(OIC A-000082, April 8, 1993, Decision on Quantum)
7. 7Exhibit 13, Report to Commercial Union dated June 24, 1996.
8. 8In Kotak and CAA Insurance Company (Ontario), (OIC P96-00019, March 27, 1997), it was held that the same method of calculation must be applied to post-accident and pre-accident income, to avoid over-or-under compensation. See also James and Allstate Insurance Company of Canada, (OIC A-015580, May 17, 1996).
9. 9See Van Devyvere and Axa Insurance (Canada) (OIC A-011720, June 7, 1996), for a discussion respecting the parameters of the term "available."
10. 10Clark and Royal Insurance Company of Canada (OIC P97-00008, September 26, 1997)
11. 11Buchanan and South Easthope Mutual Insurance Company,(OIC A95-000468, June 24, 1997). In this decision the arbitrator stated: "Arbitrators . . . have looked beyond the form of financial arrangements reached in a family business, in determining whether income is available to a family member. See for example Bonitatibus and Wellington Insurance Company, (OIC A-000082, April 8, 1993, No.2); Piper and Zurich Insurance Company (OIC A- 002585, December 6, 1993); James and Allstate Insurance Company,(OIC A-015580, May 17, 1996)."
12. 12Clark, supra, see note 10.
13. 13James, supra, see note 8.
14. 14Clark, supra, see note 10.
15. 15Patriarca and Pilot Insurance Company (OIC A-005063, August 22, 1994)
16. 16James, supra, see note 8.
17. 17Piper, supra, see note 11, affirmed on appeal, (OIC P-002585, May 1, 1996)
18. 18I accept the schedule set forth in Mrs. Zirger's written submissions dated April 21, 1999.
19. 19Clark, supra, see note 10.
20. 20E. Z. And Royal Insurance Company of Canada, (OIC A-005237, November 14, 1995)
21. 21This finding is made in a subsequent section of this decision. See Essential Tasks on p.20.
22. 22Exhibit 4, Report by D. Gary Gibson & Associates dated November 19, 1995.
23. 23Exhibit 18, confirmed in the Disability DAC assessment report.
24. 24Exhibit 32, Report dated January 29, 1995.
25. 25Exhibit 38, Job Demand Questionnaire, Functional Treatment Centres (FTC).
26. 26Exhibit 23, Report dated November 29, 1996.
27. 27Exhibit 30, Report of rehabilitation consultant dated March 31, 1996, p. 3.
28. 28Exhibit 16, see reports, clinical notes and records.
29. 29Exhibit 17, DAC report dated April 1, 1997.
30. 30Exhibit 20, Dr. Thomson's report dated March 17, 1999.
31. 31Exhibit 22, Dr. Marshall's report dated March 16, 1999.
32. 32Exhibits 36, and 39, Reports of Functional Treatment Centres.
33. 33Exhibit 36, Letter dated February 3, 1997.
34. 34Exhibit 37, Dr. H. Cameron's report dated September 11, 1998.
35. 35Bertsouklis and Liberty Mutual Fire Insurance Company, (OIC A-006499, June 28, 1995)
36. 36Edwards and State Farm Mutual Automobile Insurance Company, (OIC P-001707, February 26, 1996)
37. 37Cabral and Canada Life Casualty Insurance Company, (OIC P96-00077, April 8, 1998)
38. 38Bertsouklis, supra, see note 35.
39. 39Exhibit 18, see Disability DAC report.
40. 40Simpson and Royal Insurance Company of Canada, (OIC P-003863, August 22, 1996)
41. 41Puopolo and Wellington General Insurance Company, (OIC P-006445, July 25, 1996)
42. 42Rutledge and Wawanesa Insurance Company,(OIC A96-001160, June 17, 1997)
43. 43Chudy and West Wawanosh Mutual Insurance Company, (OIC A96-000924, January 23, 1997). This was a primary reason for terminating benefits in Guzman and Dominion of Canada General Insurance Company, (OIC A-007209, April 24, 1995).
44. 44H.K. and Canadian Surety Company, (FSCO A97-000834, August 11, 1998)
45. 45Exhibit 44, Dr. Thomson's clinical notes.
46. 46(FSCO P99-00010, June 11, 1999)