Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 183

Appeal P98-00021

OFFICE OF THE DIRECTOR OF ARBITRATIONS

CHARLES FERENCZI

Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Respondent

Before:

Nancy Makepeace, Director's Delegate

Counsel:

Allan Shulman (for Mr. Ferenczi)

Harry P. Brown (for State Farm)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is denied and the arbitration order dated March 31, 1998 is confirmed.

2. The parties will bear their own appeal expenses.

September 27, 1999

Nancy Makepeace Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Charles Ferenczi appeals the arbitration order dated March 31, 1998. The arbitrator denied his claim for weekly income benefits, and found that if any benefits were owing, they would be payable at the minimum amount of $185.60.

II. BACKGROUND

The arbitrator set out the factual background of this dispute in detail. In summary, at the time of the motor vehicle accident on February 15, 1991, Mr. Ferenczi was a 65-year-old businessman. He owned two residential rental properties on Don Mills Road and Dufferin Street, and commercial rental properties at 499-507 Dupont Street. He leased six taxi plates through his company, Dupont Taxi. He also owned a transmission repair shop, P & C Transmission ("P & C")¹ which operated out of 499 Dupont.

Mr. Ferenczi is a licenced auto mechanic. He claims that he worked long full time hours as an auto mechanic at P & C before the accident. He claims that after several attempts to return to work, he was finally forced to stop working by the spring of 1992, mainly because of ongoing pain and stiffness in his right wrist and right shoulder. He also claims that he sustained injuries to his neck, the right side of his face (including dental injuries), his left knee and his low back. Mr. Ferenczi claims that P & C operated at a loss after the accident, and was finally closed on July 1, 1992.

The arbitrator rejected Mr. Ferenczi's evidence about his hands-on work at P & C on the basis that he heard no independent evidence to support it. He found that Mr. Ferenczi's work on transmissions was "minimal, if any." He found that Mr. Ferenczi's essential tasks were those of a self-employed owner and manager of several rental properties and taxi-plate leases.

The arbitrator was not persuaded that Mr. Ferenczi's right wrist injury resulted from the accident because Mr. Ferenczi did not tell any of his doctors about a very similar injury he sustained about three weeks earlier. The arbitrator also did not accept that the accident caused an injury to Mr. Ferenczi's right shoulder, mostly because of the delayed onset of symptoms.

Accordingly, the arbitrator concluded that Mr. Ferenczi was not entitled to any weekly income benefits. In case he was wrong, he went on to consider Mr. Ferenczi's claim that he is entitled to benefits at the maximum rate. The arbitrator agreed with State Farm that Mr. Ferenczi would only be entitled to benefits at the minimum rate of $185.60 per week.

III. SCOPE OF THE APPEAL

As Mr. Ferenczi filed his application for arbitration before November 1, 1996, his appeal is not confined to questions of law. However, it is well established that it is not my role on appeal to rehear the matter or substitute my assessment of the evidence for that of the arbitrator. In order to succeed, Mr. Ferenczi must show that the arbitrator made a specific and serious error, based his decision on irrelevant matters, or failed to consider important evidence.

Mr. Ferenczi's submissions on appeal essentially restate his position at arbitration. I had available to me the 52 exhibits admitted at the arbitration hearing, and transcripts of the five days of evidence.

IV. PRELIMINARY AND PROCEDURAL ISSUES

Mr. Ferenczi represented himself at the arbitration hearing. It is evident from the transcript that this may not have been a wise decision. He retained counsel for the purpose of appeal, and now makes three submissions relating to his self-representation.

A. Hospital Records

State Farm submitted that Mr. Ferenczi's right wrist injury did not result from the accident of February 15, 1991, but rather from a previous slip-and-fall incident on January 28, 1991, which also resulted in a fracture of the right wrist. On that occasion, Mr. Ferenczi attended the emergency department of Northwestern General Hospital. State Farm relied on the hospital records to dispute the causal connection between the later wrist injury and the accident, and to challenge Mr. Ferenczi's credibility, since none of the doctors who treated him after the accident knew about the earlier injury. On October 27, 1997, counsel for State Farm began to cross-examine Mr. Ferenczi about this incident. In response to preliminary questions, Mr. Ferenczi stated that he never signed an authorization for release of these records, and questioned how State Farm obtained them. Once satisfied that Mr. Ferenczi knew the issue of his prior injury would arise in the hearing, the arbitrator continued.

On appeal, Mr. Ferenczi argued that the arbitrator should have excluded these records from the evidence on the basis that they were obtained without authorization. A preliminary issue hearing was held by telephone on August 10, 1999. I found that the records had been properly released with Mr. Ferenczi's authorization. I refused Mr. Ferenczi's motion to lead additional oral evidence on the point. My reasons are appended.

B. Fresh Evidence

In that same order, I refused Mr. Ferenczi's motion to lead additional oral evidence from Paul Fernandes. I reconsidered the issue after hearing the parties' appeal submissions, but I am not persuaded I should admit this evidence.

Mr. Fernandes was Mr. Ferenczi's associate or co-worker at P & C Transmission. Mr. Ferenczi called him as a witness at the arbitration hearing, but he only asked questions pertaining to the physical differences between them. This evidence was led in support of Mr. Ferenczi's submission that Brian McCulloch, the private investigator who observed him in the transmission shop on three days in April and May 1992, described him inaccurately in his report of May 8, 1992.² Mr. Ferenczi believes the description found in Mr. McCulloch's report resembles Mr. Fernandes more than it does him. However, Mr. Ferenczi admitted that he is the person shown in the surveillance videotape prepared on May 5, 1992. Mr. McCulloch testified that the person described in his report was the person he observed on all three days, the same person he saw in the hearing room — Mr. Ferenczi. I find that the arbitrator properly limited Mr. Ferenczi's examination of Mr. Fernandes on this point. Perhaps because of his focus on the identification question, Mr. Ferenczi did not question Mr. Fernandes about the nature of their business arrangement or their work at P & C before and after the accident.

Mr. Ferenczi introduced an audiotape of an interview between Mr. Fernandes and Ruth Cohen, an investigator retained by State Farm.³ Mr. Fernandes' comments about Mr. Ferenczi's work at P & C before and after the accident, and about their business arrangements, tend to support Mr. Ferenczi's evidence. Mr. Ferenczi is concerned that the arbitrator might not have considered the tape because the decision does not refer to it.

As Mr. Ferenczi represented himself, he may have believed that it was not necessary for Mr. Fernandes to repeat before the arbitrator what he told Ms. Cohen. However, this meant that the arbitrator did not have an opportunity to assess Mr. Fernandes' credibility. Mr. Fernandes was not cross-examined about his comments to Ms. Cohen. This is important because there was evidence that Mr. Fernandes' brother had an ownership interest in the business, and his sister-in-law owned a successor transmission shop on the same premises, suggesting that Mr. Fernandes does not have an arm's length relationship with Mr. Ferenczi. That Mr. Ferenczi was present throughout the interview may also affect the weight given this evidence. I find that the audiotape provides only limited support for Mr. Ferenczi's claim. The arbitrator may not have mentioned it for this reason.

Mr. Fernandes' comments to Ms. Cohen corroborated Mr. Ferenczi's testimony that P & C's records had been lost or destroyed in mid-1992. He agreed that P & C was a cash business, and that Mr. Ferenczi handled the business end of things. Mr. Fernandes described his involvement as being limited to occasionally making the bank deposits and paying cash for parts, along with the mechanics' work. As I will explain, the real problem for Mr. Ferenczi in this case was the complete absence of coherent, credible financial records. It is simply not possible to determine what his self-employment income and activities were before the accident. Given the gaps and discrepancies in Mr. Ferenczi's documentary evidence, further oral evidence from Mr. Fernandes would almost certainly not have affected the outcome of the arbitration hearing.

Just before the appeal hearing, Mr. Ferenczi tendered another audiotaped interview of Mr. Fernandes, this time by Mr. Ferenczi's counsel. As I am not persuaded that Mr. Fernandes' comments in this interview could reasonably be expected to affect the outcome, I find that the criteria for its admission as fresh evidence are not satisfied.

I have sympathy for the difficulties faced by an insured person who does not have counsel in an arbitration hearing. However, this does not automatically entitle Mr. Ferenczi to a new hearing. If it did, insured persons might be motivated to appear at arbitration without counsel, in the knowledge that any defects in the case could be corrected on appeal. The dispute resolution system would collapse under the weight. Factors to be considered in deciding whether to exercise my discretion to admit fresh evidence on this basis include whether the insured person knew about his right to counsel and whether financial hardship prevented him from retaining counsel. Neither factor applies in this case.

Mr. Ferenczi did not claim that he was unable to afford counsel. In fact, he retained counsel, Stephen J. Gearing, to represent him in a tort claim arising out of this accident. Mr. Gearing continued to advise him, at least in an informal capacity, as late as January 1997.⁴ Mr. Ferenczi retained the firm of Gluckstein, Neinstein to represent him with respect to his accident benefits claim by April 1992 at the latest, and they continued to represent him until at least February 1993.⁵

Mr. Ferenczi was repeatedly advised of his right to retain counsel. This advice is contained in the standard pre-hearing letter dated December 16, 1996. The arbitrator who heard the preliminary issue involving time limits repeated it. State Farm's counsel advised Mr. Ferenczi to get counsel on several occasions. Finally, the arbitrator whose decision is appealed from gave the same advice.⁶ I am satisfied that Mr. Ferenczi has had every opportunity to retain counsel. He had the right to choose not to retain counsel, even if it was not a wise decision. Unfortunately, his decision has consequences.

Accordingly, I am not satisfied that fairness requires me to allow Mr. Ferenczi a new hearing or partial rehearing in this case.

C. Conduct of the Hearing

Mr. Ferenczi submits on appeal that the arbitrator should have helped him in the hearing because he was unrepresented. In particular, he argues that he should have been advised that Mr. Fernandes' testimony was crucial to his case. As noted above, Mr. Fernandes was questioned only about the identity issue. For the reasons given above, I am not satisfied additional oral evidence from Mr. Fernandes would have affected the outcome.

FSCO arbitrators have a long tradition of adapting the hearing process to suit the dispute and the parties. Where an insured person represents himself, the arbitrator may intervene to explain what witnesses he needs, how witnesses should be examined and cross-examined, what documents are needed and how they are put into evidence, and what is relevant and not relevant. The rules of evidence and procedure are applied pragmatically and not technically. The goal is to ensure a just result, and not one that it dictated by one party's greater access to legal services.

But the arbitrator must balance his concern that the insured person have a fair hearing with his concern that the insurer also be heard. He must avoid stepping into the role of insured's representative, or being seen to do so. The arbitrator also has limited knowledge about what the insured person wants to prove. The arbitrator can attempt to guide the process as it moves along, but it is ultimately for the insured to decide what case he wants to present. In addition, arbitrators are mandated to facilitate "the quickest, most just and least expensive resolution of the dispute."⁷The dispute resolution process does not allow hearings to be extended indefinitely.

Mr. Ferenczi testified for about two and a half days. He explained his financial affairs, his business activities before the accident, and how the accident affected his ability to work. The arbitrator spent a great deal of time explaining the accident benefits scheme and the hearing process, especially on the first day of hearing. The transcript is replete with the arbitrator's attempts to understand where Mr. Ferenczi was going with his case and his explanations about how to introduce evidence. He was patient with Mr. Ferenczi's testimony, which was frequently not on point, and asked friendly questions at several points in an attempt to clarify the evidence. Short of taking on the role of Mr. Ferenczi's representative, I find there is little if anything more the arbitrator could have done. Mr. Ferenczi had a fair hearing.

V. ANALYSIS

Mr. Ferenczi challenges the arbitrator's finding that he is not entitled to weekly income benefits after the accident and that benefits would be payable at the rate of $185.60 per week if he were entitled. Although the benefit rate issue only arises if it is determined that Mr. Ferenczi is entitled to benefits, Mr. Ferenczi's failure to bring evidence of his business activities and income was crucial to the arbitrator's findings on both issues.

A. Benefit rate

The Schedule⁸ provides for a weekly income benefit of 80 percent of the insured person's gross pre-accident income. Self-employment income is reduced by the amount of business expenses that cease after the accident. The regulation sets a minimum weekly benefit rate of $185.60 per week and a maximum of $600 per week.⁹ The benefit is reduced by 80 percent of the insured person's post-accident income. The Schedule does not expressly recognize business losses, but if the insured person's business lost money after the accident, benefits will be not be reduced.¹⁰

Mr. Ferenczi claims benefits of $600 per week based on gross self-employment income of $4,610 per month from P & C Transmission before the accident. The arbitrator rejected the claim, stating that Mr. Ferenczi provided no independent documentary evidence of income or expenses. Counsel for Mr. Ferenczi recognizes that Mr. Ferenczi’s record-keeping is unsophisticated, but submits that the totality of the evidence is sufficient to show that he grossed at least $750 per month, the amount needed for a benefit of $600 per week.

Arbitration and appeal decisions have taken a flexible and pragmatic approach to assessing small business income claims. Director’s Delegate Naylor described the test in Agha and General Accident:¹¹

It is well-established that the onus is on the applicant to provide reliable evidence of his or her pre-accident income, including both gross income and deductible expenses.¹² However, applicants are not expected to pinpoint the amount precisely. Most business filings do not reflect the periods of time legislated under the Schedule. Moreover, it is recognised that not all applicants have well-organised business records or file income tax returns when they should. That is not the focus of the inquiry. The goal is to come up with a sensible approximation of earnings during the periods in question, based on the evidence. If there is a reasonable basis for concluding that an applicant’s income, less ceasing expenses, exceeds the amount required for maximum benefits, then that is all that is needed.

However, an insured person who runs a "cash business" generally cannot expect to succeed at arbitration without putting forward some credible evidence to corroborate his own oral evidence. At the very least, the insured must present a coherent account of his financial affairs that provides a reasonable basis for an estimate of his pre-accident income. That did not happen in this case. There were serious gaps and inconsistencies in the evidence that were not adequately explained.

The evidence left the arbitrator with no alternative but to reject Mr. Ferenczi's claim. Because Mr. Ferenczi produced no credible independent evidence of his income and expenses, the arbitrator did not find it necessary to discuss State Farm's evidence. I find no error in his reasons or disposition of the case. However, to clarify the decision for Mr. Ferenczi, I will discuss some of the most significant gaps and discrepancies.

Ownership of P & C Transmission

It is not clear who owned P & C Transmission during the relevant period. Mr. Ferenczi testified that P & C was created when he sold Yellow Transmission to Paul Fernandes on August 16, 1989 for $50,000, of which he received $11,000 at the time. Evidence of the transaction consisted of a handwritten note signed by both parties indicating that $11,000 had been paid and a balance of $39,000 remained.¹³ No evidence was presented as to how the remaining $39,000 of the purchase price was to be paid or whether it was paid. Mr. Ferenczi also relied on a bankbook entry dated May 29, 1989 showing a deposit of $11,000 that day.¹⁴ Articles of Incorporation dated August 28, 1989 list Mr. Ferenczi and Mr. Michael Fernandes as the two directors.¹⁵

In his tape-recorded interview, Mr. Fernandes told Ms. Cohen that Michael Fernandes was his brother. He agreed with Ms. Cohen’s suggestion that Michael was a silent partner. According to Mr. Fernandes, Mr. Ferenczi did all the company’s business, except for depositing money in the bank or buying parts as needed, which he (Paul Fernandes) would sometimes do. At the hearing, Mr. Ferenczi testified that he was the owner of the business, and responsible for all the company’s financial arrangements. But on cross-examination, he admitted telling Revenue Canada in 1992 that he was not responsible for P & C’s taxes because he sold the business to Paul Fernandes in 1989.¹⁶ Whether Mr. Ferenczi owned the business by himself is important because a partner would likely take a share in the profits or losses.

Mr. Ferenczi testified that he closed the business in July 1992 because his accident-related injuries prevented him from working in the shop himself, which resulted in the business incurring losses. He testified that his frequent attendances at the shop were only for the purpose of collecting rent. However, the Notice of Change form filed with the Ministry of Consumer and Commercial Relations indicates that he did not resign his directorship until January 13, 1993.¹⁷Mr. Ferenczi testified that after P & C closed down, he subdivided the premises into two areas, and rented them out to Driveline Transmission and Dupont Auto Sales. No lease or other documents pertaining to this transaction were entered.

Pursuant to the pre-hearing disclosure order, State Farm obtained monthly statements for P & C's chequing account from December 1991 to January 1993. The account appears to have been active until the last month. The account-holder is identified as "P.C. Transmis".¹⁸ When State Farm's counsel introduced these statements through Mr. Edwards, Mr. Ferenczi stated "the business was closed in July, 1992. But they keep the bank account, I didn't know about it."¹⁹ He added later, "I didn't know that they were using the same account. They should've changed when the business changed."²⁰ These comments suggest Mr. Ferenczi may have had some ongoing involvement with Driveline other than as landlord. On cross-examination, Mr. Ferenczi's testified that Paul Fernandes' father, Henry, was the nominal owner of Driveline, though he did not actually run the business. (He also suggested that Henry Fernandes was involved with P & C.)

Mr. Ferenczi testified that in August 1994, Driveline became ABC Transmission, operating out of the same shop. He put forward what purports to be his lease agreement with ABC Transmission, dated on August 22, 1994.²¹ It is signed only by Mr. Ferenczi, but the name "Pamela DaSilva" is printed beside his name. Mr. Ferenczi testified that Ms. DaSilva was Paul Fernandes' sister-in-law. He was unable to explain her role in ABC and testified that he had never met her.²² The document consists of a single paragraph identifying the property (501 Dupont), the term of the lease (yearly), the phone numbers of the premises, and the tenant's obligation to pay rent, hydro, property taxes, insurance, gas and water, and repairs. The amount of rent is unspecified. This document does not provide persuasive evidence about the relationship between Mr. Ferenczi and ABC Transmission. If Mr. Ferenczi had an ongoing interest in Driveline and ABC, this would affect the calculation of his post-accident income or loss.

Inadequacy of records

Mr. Ferenczi produced no independent source documents relating to P & C’s income and expenses before the accident. He and Mr. Ferndandes agreed that the business ran mostly on a cash basis and that what records there were were lost or destroyed around July 1992, when the business was allegedly sold. Mr. Ferenczi also produced no independent documentation of his business expenses. He prepared several documents intended to describe his business losses, but they are unsupported by any independent documentation.

Included in the claimed business losses are the $39,000 outstanding proceeds from the sale of P & C in 1989, and outstanding rental payments from Elegedor Party Rental, another tenant in the Dupont building, and ABC. Mr. Ferenczi did not explain how these losses were related to his accident.²³ Mr. Ferenczi also claimed some $84,000 he says he paid to Mr. Gearing in relation to his tort claim, as well as personal expenses such as mortgage payments on his home, home renovation costs, and utility bills for his home.²⁴ The cheques to Mr. Gearing are written on Dupont Taxi’s account, and Mr. Ferenczi testified that he treated these expenses as relating to Dupont Taxi for tax purposes. Mr. Ferenczi's habit of intermingling personal expenses with business expenses, and intermingling the income and expenses of his various businesses, makes it virtually impossible to determine what business losses, if any, he incurred as a result of the accident.

Mr. Ferenczi did not report income from employment or self-employment on his income tax returns for 1990 and 1991.²⁵ Revenue Canada print-outs for the years 1988 through 1995 confirm that he has not done so for any of those years.²⁶

The entry for $4,610 on which Mr. Ferenczi relies is found in a bank passbook which Mr. Ferenczi explained he uses for transactions relating to P & C.²⁷ However, the passbook includes many other deposits, some for quite substantial amounts, before and after the accident. Mr. Ferenczi presented no cheque stub or other source document to show that this particular deposit was related to P & C. There was no evidence that it represented his wages or draw from the business, rather than rent or a payment from Michael Fernandes. The regular pattern of payment typical of wages is absent. Mr. Ferenczi's own testimony may explain why. He explained, "I have money coming in, but I don't ever see the money. Soon as the money coming in, I paying it out because those people have to get paid."²⁸ He also explained that much of the value of P & C was tied up in its stock of transmissions and that "most of the money went . . . into the stock."²⁹

At the arbitration hearing, Mr. Ferenczi characterised his payments from P & C as self-employment income before the accident and rent afterwards. However, at his examination for discovery, Mr. Ferenczi denied receiving income from P & C and insisted these payments were rent.³⁰ He was unable to explain this inconsistency to the arbitrator.

Mr. Ferenczi presented a series of P & C cheques payable to him for $1,277.00 and multiples of that figure, signed by Mr. Fernandes. The cheques are initially dated between October 1991 and July 1992, though the dates on some of the older cheques were changed to August 11, 1992. Mr. Ferenczi explained that he changed the dates because otherwise the cheques would have been stale-dated. The cheques were all deposited on August 11, 1992. Mr. Ferenczi testified that these were rent cheques from P & C, and that October 1991 was the first time P & C paid him rent.

There was no written lease. All the cheques were returned for insufficient funds. Mr. Ferenczi relied on these cheques as evidence that P & C suffered business losses as a result of his inability to work. In cross-examination, State Farm’s counsel asked Mr. Ferenczi why he held onto these cheques, knowing that P & C would not be able to pay. He answered that he "was not there" anymore.³¹ But Mr. Ferenczi's own testimony was that he owned P & C until July 1992. I find it more likely that the cheques were produced for the purpose of supporting Mr. Ferenczi’s claim for business losses.

Mr. Ferenczi consistently reported income from his rental properties on his pre-accident tax returns. He reported gross rental income of $120,300.00 (net $4,596.78) in 1990 and $88,800.00 (net loss of $1,156.78) in 1991. Rent from rental properties is self-employment income, rather than investment income, only to the extent that Mr. Ferenczi was "engaged in" self-employment. While Mr. Ferenczi referred to buying "and fixing up" old houses on his application for accident benefits form,³² he gave almost no evidence about this at the arbitration hearing. State Farm retained Daniel Edwards, a chartered accountant with Coopers & Lybrand, to assist with calculation of Mr. Ferenczi's benefits. Mr. Edwards proposed to accept $1,060 — 23 percent of Mr. Ferenczi's 1990 rental income — as self-employment income. This was based on his calculation that for the 1990 tax year, the only year for which information was available, 23 percent of Mr. Ferenczi’s rental property expenses related to operational costs as opposed to ownership costs.³³ This amount would not entitle Mr. Ferenczi to a weekly benefit at more than the minimum rate.

In 1990, Mr. Ferenczi also reported other income of $24,500. The amount was $29,000.00 in 1991. On both tax returns, Mr. Ferenczi gave his occupation as "executive" and his employer as "Dupont Taxi." Mr. Edwards testified that this income probably relates to the taxi plate leases. The February 12, 1993 letter to State Farm from Mr. Ferenczi's former counsel supports that view. If the income from the taxi plates is is investment income, as Mr. Edwards proposes, it has no bearing on the calculation of Mr. Ferenczi's accident benefits. If it is self-employment income, it would be included in calculation of Mr. Ferenczi's pre-accident and post-accident income, after expenses are taken into account. As Mr. Ferenczi's former counsel pointed out, this would likely reduce Mr. Ferenczi's benefit payable to zero.

No source documents were provided for any of this money. The bank passbooks Mr. Ferenczi has provided give no indication whether any particular deposit is related to the taxi leases, the rental properties, or P & C. Mr. Ferenczi's record-keeping practices make it impossible to identify what income and expenses relate to the taxi plates rather than P & C.

In summary,

• Mr. Ferenczi produced no reliable source documents to support his evidence about his income and expenses from self-employment.

• Mr. Ferenczi's own evidence indicates there was significant intermingling of income and expenses amongst his various businesses and between his business and personal accounts.

• It is not clear whether Mr. Ferenczi owned P & C Transmission on his own between 1989 and July 1992, or whether he shared ownership with Paul Fernandes, Michael Fernandes or Henry Fernandes.

• It is not clear whether Mr. Ferenczi sold, or closed P & C in July 1992, or remained involved in the transmission shops operating out of the premises under a different name.

• Mr. Fernandes has variously characterized his income from P & C as rent and self-employment income. The documentary evidence provides no basis for characterizing it as self-employment income.

The evidence falls far short of establishing a reasonable basis for concluding that Mr. Ferenczi's self-employment income before the accident, less ceasing expenses, entitles him to benefits of more than $185.60 per week, or that Mr. Ferenczi sustained business losses as a result of the accident. Accordingly, I find no error in the arbitrator's conclusion that any weekly benefits to which Mr. Ferenczi is entitled are payable at no more than $185.60 per week.

B. Disability

Mr. Ferenczi challenges three of the arbitrator's factual findings that support his finding that no weekly benefits are payable. While he raises valid concerns about the arbitrator’s findings with respect to his right wrist and right shoulder injury, I am satisfied that the evidence, considered as a whole, amply supports the arbitrator’s finding that Mr. Ferenczi did not suffer a substantial inability to perform the essential tasks of his self-employment as a result of the accident.

1. Essential tasks

The arbitrator found that at the time of the accident, Mr. Ferenczi's essential tasks "were those of a self-employed owner and manager of several income-producing real estate properties and as an owner and operator of a taxi plate leasing business." This was an important finding because Mr. Ferenczi does not claim that his accident-related injuries disable him from his administrative tasks relating to the rental properties and taxi plates.

Mr. Ferenczi submits that Paul Fernandes supported his account of his activities before the accident in his conversation with Ms. Cohen. While Mr. Fernandes said that he and Mr. Ferenczi worked full-time in the shop, sometimes hiring others to handle extra work, and that Mr. Ferenczi was the transmission expert. Mr. Fernandes also told Ms. Cohen that Mr. Ferenczi had trouble working with the transmissions after the accident, and often asked for help. Mr. Ferenczi called Mr. Fernandes to testify at the hearing, but did not lead him through his evidence about their work together before and after the accident. For the reasons given above, I did not allow Mr. Ferenczi to lead fresh evidence from Mr. Fernandes on appeal.

Despite my concerns about this evidence, it provides limited support for Mr. Ferenczi’s account of his pre-accident tasks. Moreover, as the surveillance videotape shows him working on transmissions after the accident, there is no reason to believe he would not have done so before the accident. I also note that Mr. Ferenczi has consistently told the doctors he has seen since the accident that he was self-employed as a transmission mechanic. However, support for the arbitrator's description of Mr. Ferenczi's role as "troubleshooter" is found in Mr. Ferenczi's examination for discovery, when he described his role as "helping out and being an advisor."³⁴

In any event, the surveillance evidence is a problem for Mr. Ferenczi because it shows him working on transmissions after the accident. This does not necessarily mean he is not entitled to benefits. He might still receive benefits, if, for example, he worked full-time before the accident and could only work part-time afterwards, or if the accident rendered him unable to perform the essential tasks of the job. But Mr. Ferenczi provided no independent evidence to support his oral evidence about his hours and duties. In my view, the complexity of Mr. Ferenczi's business arrangements and the gaps and discrepancies in his evidence more than justified the arbitrator's finding that he did not satisfy the burden of proving that he worked full-time as a transmission mechanic at P & C.

2. Prior injury to right wrist

The arbitrator found that Mr. Ferenczi's wrist injury on January 28, 1991 was the same kind of injury he claims he suffered in the accident on February 15, 1991. He found that Mr. Ferenczi deliberately withheld this information from the doctors he saw after the accident, undermining his credibility. As the arbitrator had no evidence that the motor vehicle accident caused a new injury or aggravated the old one, he dismissed Mr. Ferenczi's claim that his right wrist problems result from the accident.

On appeal, Mr. Ferenczi reiterated his position that the earlier injury was less serious. The x-rays and medical reports support this claim. The x-rays taken after the January 28, 1991 incident revealed an undisplaced fracture of the distal radius. A cast was put on the wrist, but removed the same day because of swelling. Mr. Ferenczi claims that he received no further treatment on the wrist before the car accident. His OHIP records confirm this. The x-rays taken on February 15, 1991 show a displaced fracture of the dorsal radius. Dr. Dana F.Wilson, an orthopaedic surgeon at Toronto Western Hospital, performed a closed reduction, and a cast was put on the wrist for about six weeks.

No medical evidence was put forward as to whether the earlier injury might have weakened Mr. Ferenczi’s right wrist, making it more vulnerable to a more serious fracture as a result of the car accident. However, I find no error in the arbitrator’s finding it difficult to believe that Mr. Ferenczi could simply forget to tell the doctors he saw after the accident (including those he saw immediately afterwards) that he fractured the same wrist not three weeks previously. No matter how minor the fracture, an incident requiring two hospital attendances is memorable. I agree with the arbitrator that Mr. Ferenczi’s failure to disclose this information undermines his credibility. This does not dispose of Mr. Ferenczi’s claim, because there is no question he suffered an objectively verifiable injury. However, it further undermines his claim that he was able to work full-time hours as a transmission mechanic before the accident.

3. Right shoulder injury

The arbitrator found that Mr. Ferenczi did not complain about his right shoulder until December 13, 1991, more than nine months after the accident. This finding was based on Dr. H. Becker’s report of November 2, 1992.³⁵ Dr. Becker apparently based his comment on a December 12, 1991 record of Mr. Ferenczi’s attendance at Toronto Western Hospital complaining of right shoulder and wrist pain. The arbitrator concluded that there was no evidence connecting this injury to the car accident.

In fact, Mr. Ferenczi complained of right shoulder pain on February 15, 1991, when he first sought treatment after the accident. The note is easy to miss, on the second page of the hospital emergency report. The note says "pain right shoulder" and notes that on examination, Mr. Ferenczi had "full range of motion right shoulder with minimal pain only." Mr. Ferenczi saw Dr. H.J. Kreder in the hospital's fracture clinic. Dr. Kreder diagnosed "mild right shoulder impingement pain," and recommended physiotherapy.

Clearly the hospital's main concern was Mr. Ferenczi's wrist fracture. This seems to have been Mr. Ferenczi's priority too, since he did not mention any shoulder problems in his application for accident benefits, dated June 7, 1991. His next complaint about his right shoulder after February 15, 1991 was ten months later, on December 12, 1991. The delayed onset of symptoms weakens but does not dispose of Mr. Ferenczi's claim. His right shoulder injury seems initially to have been less serious, but at least two doctors observed muscle wasting and reduced mobility by the spring of 1992.

4. Analysis and conclusion on disability

The medical evidence supports Mr. Ferenczi's claim that he experienced pain and stiffness in his right wrist and right shoulder for some time after the accident. A surveillance videotape taken on May 5, 1992 shows Mr. Ferenczi working in the shop for about 20 minutes in total. He moves naturally and fluidly, though there is a slight suggestion that he may be avoiding lifting heavy weights (transmissions or parts) with his right arm. The surveillance taken outside over five days in January 1997 is quite different. It supports his claim that his right shoulder and/or his right wrist continue to trouble him. His movements are otherwise normal. The difference in the two surveillance tapes accords with the medical evidence suggesting that the shoulder symptoms worsened between 1992 and 1997.

To succeed at the arbitration, Mr. Ferenczi had to prove not only that he sustained an injury as a result of the accident, but that the injury rendered him substantially unable to perform the essential tasks of his self-employment before the accident. The problem with Mr. Ferenczi's claim is that he did not provide a persuasive, coherent account of his business and self-employment activities before the accident. This made it impossible for the arbitrator to determine what were his essential tasks before the accident and compare them with his functional ability after the accident. Because Mr. Ferenczi’s impairment was less than total, this gap in the evidence was determinative. Accordingly, I find that the evidence amply supports the arbitrator’s dismissal of Mr. Ferenczi’s claim for weekly benefits.

VI. APPEAL EXPENSES

The criteria for awarding appeal expenses are set out in Regulation 664, R.R.O. 1990, as amended by O.Reg.464/96. Mr. Ferenczi did not succeed in his appeal, which essentially restated the arguments he made at arbitration. However, as Mr. Ferenczi represented himself at arbitration, he may have not have understood the basis for the arbitrator’s decision. On balance, I find it appropriate that each party bear its own appeal expenses.

September 27, 1999

Nancy Makepeace Director's Delegate

Date

APPENDIX – DECISION ON PRELIMINARY ISSUE

(released by letter dated August 19, 1999)

The appeal hearing in this matter is scheduled for September 13, 1999 at 1:00 at the offices of the Financial Services Commission of Ontario. Mr. Ferenczi appeals the arbitration order, dated March 31, 1998, dismissing his claim for weekly income benefits relating to his motor vehicle accident of February 15, 1991.

A preliminary issue hearing was held to deal with Mr. Ferenczi’s allegation that State Farm obtained certain hospital records without authorization. He submits that the arbitrator erred in admitting and relying on these records. State Farm submits that Mr. Ferenczi signed an authorization for release of the records and knew it intended to rely on them well before the arbitration hearing. Both parties seek to adduce affidavit and oral evidence about how the records were obtained. Mr. Ferenczi also wishes to call Mr. Paul Fernandes, an employee of P & C Transmission, to testify at the appeal hearing about Mr. Ferenczi’s activities in the workplace before and after the accident, and about their financial arrangements. I heard the parties submissions on these preliminary issues by telephone conference on August 10, 1999.

My ruling is as follows:

1. The hospital records were properly obtained with Mr. Ferenczi's signed authorization.

2. The appeal hearing will proceed on the record without fresh evidence.

My reasons follow.

BACKGROUND

Mr. Ferenczi claims that his right wrist was fractured in a motor vehicle accident on February 15, 1991.³⁶ X-rays taken at Toronto Western Hospital the morning after the accident revealed a displaced fracture of the dorsal radius. A closed reduction was performed and the wrist put in a cast.³⁷ However, State Farm claims that Mr. Ferenczi broke his wrist in a slip-and-fall accident 18 days before the motor vehicle accident. It relies on records of Mr. Ferenczi's attendance at Northwestern General Hospital on January 28, 1991. X-rays taken at that time revealed an undisplaced fracture of the distal radius.³⁸

Mr. Ferenczi did not tell the doctors he saw after the accident about this earlier incident. Mr. Ferenczi explained at the hearing that "he could still work, and he forgot about it." According to Mr. Ferenczi, the cast was removed after about 4 hours because of swelling, and he had no further problems with his wrist before the motor vehicle accident. The arbitrator preferred State Farm's submission that Mr. Ferenczi deliberately withheld this information. This undermined Mr. Ferenczi's credibility. The arbitrator found that he had no credible evidence that the motor vehicle accident caused a new injury or aggravated the old one. Accordingly, he was not persuaded that the car accident was the cause of Mr. Ferenczi's right wrist injury.

Mr. Ferenczi represented himself at arbitration. He first raised the authorization issue on the fifth day of the hearing, when State Farm's counsel sought to introduce the January 28, 1991 hospital records.³⁹ After initially questioning how State Farm obtained the records, he said "I did not sign for it." On further questioning from State Farm's counsel, he acknowledged that Ruth Cohen, the investigator retained by State Farm, had approached him for an authorization to release bank records, and that he had provided that authorization. He denied that Ms. Cohen had asked him to authorize release of the hospital records. He also denied receiving a copy of the records from State Farm's counsel before the hearing. Once satisfied that State Farm had produced the records to Mr. Ferenczi during the hearing, the arbitrator stated "I'm not going to delve into [the issue] further" and suggested Mr. Ferenczi may want to take other proceedings against the hospital or State Farm.

Mr. Ferenczi retained counsel for purposes of the appeal. His counsel states that the hospital has not produced proof that their release of the records was authorized, despite numerous requests by telephone and in writing. Initially he sought to lead evidence to this effect by way of an affidavit from his secretary⁴⁰ and viva voce evidence from a hospital records administrator. However, a hospital official has subsequently confirmed that "Our files do not contain the consent. . ."⁴¹ and State Farm concedes that it is unable to produce a copy of a signed authorization from Mr. Ferenczi. The hospital states that its policy is to release patient records only "pursuant to a court order or on receipt of a written request signed by the patient." As counsel for Mr. Ferenczi argues, this does not rule out the records being released without an authorization in contravention of the policy.

At the arbitration pre-hearing conference held in this matter on November 4, 1996, the arbitrator ordered Mr. Ferenczi to produce, on consent, a number of documents, including a decoded list of OHIP services provided to Mr. Ferenczi from January 1, 1989, and hospital records from January 1, 1989 and ongoing. On March 7, 1997, State Farm's counsel wrote to Mr. Ferenczi, enclosing the OHIP records and other documents disclosed to date. The letter also pointed out that the OHIP records show a fractured wrist on January 28, 1991. The letter made no reference to the hospital records.

Ms. Cohen affirmed by affidavit that on March 6, 1997, she served a summons on Janet Raymond, a health records technician at the hospital, for production of Mr. Ferenczi's records. The next day, Ms. Raymond called Ms. Cohen to tell her that the file was ready but a written consent from Mr. Ferenczi would be required.⁴² According to Ms. Cohen, she obtained an authorization from State Farm's counsel, and attended at Mr. Ferenczi's home at 4:30 p.m. on March 10, 1997. She affirms that he signed two copies of authorizations for release of the hospital records and the bank records, and that she left one signed copy of each authorization with him. The next day, she returned to the hospital with the authorization. After paying a fee, she obtained the records. Ms. Cohen stated that she returned to the hospital in October 1997 to obtain the x-rays. The records were released after an x-ray technician telephoned the health records department to confirm that the consent was already on file (and after payment of a further fee). Mr. Ferenczi seeks to have Ms. Cohen available for cross-examination at the appeal hearing.

In a letter to Mr. Ferenczi dated October 16, 1997, State Farm's counsel advised "We will be filing the hospital records regarding your previous accident." The letter did not indicate that the records had been produced or were enclosed. However, State Farm submits that they were produced to Mr. Ferenczi well in advance of the hearing, though it is unable to produce written confirmation of this. State Farm proffers an affidavit from Mr. Guy Jones, an arbitrator who conducted two settlement discussions between Mr. Ferenczi and State Farm's counsel on June 6, 1997 and October 10, 1997. State Farm's counsel faxed the affidavit to Mr. Ferenczi's counsel shortly before the telephone conference; I did not have a copy available to me. Counsel agree that Mr. Jones' affidavit indicates that Mr. Ferenczi's prior injury was discussed in both sessions. They also agree that Mr. Jones does not say whether Mr. Ferenczi had or was given a copy of the records at that time. Mr. Ferenczi's counsel seeks to cross-examine Mr. Jones on his affidavit.

State Farm submits that the records were properly obtained with Mr. Ferenczi's signed consent. It seeks to cross-examine Mr. Ferenczi on the issue.

ANALYSIS AND CONCLUSION

I reviewed the criteria for admission of fresh evidence on appeal in my letter to the parties dated June 21, 1999:

The admission of new evidence on appeal is discretionary. The overriding considerations in exercising the discretion are the relative prejudice to the parties in admitting or excluding the proffered evidence and the competing goals of finality, natural justice and deciding the matter on its real merits. Subject to these considerations, the criteria for admission of fresh evidence on appeal are:⁴³

• whether the evidence could have been made available before the arbitration hearing if the moving party had exercised due diligence;

• whether the evidence is reasonably capable of belief; and

• whether the evidence relates to a potentially decisive issue and if accepted, could reasonably be expected to affect the result.

With respect to the "due diligence" test, I indicated that since Mr. Ferenczi represented himself at arbitration, "I do not find it appropriate to impose on him the same standard of 'due diligence' I would impose on a party represented by counsel." Nevertheless, based on the oral submissions of State Farm's counsel, I find that Mr. Ferenczi knew or reasonably should have known well before the hearing that his prior wrist injury would be an important issue at the hearing. If this was not clear in March 1997, when State Farm's counsel forwarded the OHIP records and drew Mr. Ferenczi's attention to the record of the fracture, it should have been clear by October 1997, when State Farm's counsel advised that he would rely on the hospital records at the hearing. Based on these letters, I find that State Farm's reliance on the hospital records was no surprise to Mr. Ferenczi. I do not find it necessary to rely on Mr. Jones' affidavit.⁴⁴ Mr. Ferenczi's delay in raising the authorization issue is troubling because it deprived State Farm of an opportunity to resolve his concerns before the hearing by producing a signed authorization or obtaining a new one.

I accept Mr. Ferenczi's submission that State Farm bears the onus of proving it had legal authority to obtain the hospital records. I have no hesitation in saying that an insurer should be able to produce such proof — a summons, arbitrator's order or signed authorization — on request. I find it remarkable that neither the hospital nor the investigator nor State Farm's counsel can produce such evidence in this case.

In the absence of documentary proof, I must decide whether to accept Mr. Ferenczi's oral testimony that he did not sign a consent or Ms. Cohen's affidavit evidence that she obtained the records with proper authorization.⁴⁵ I prefer Ms. Cohen's evidence for the following reasons.

Mr. Ferenczi has a direct interest in my finding that the records were obtained without authorization. He wants a rehearing with the records excluded. His appeal submissions also focus on his claim that he was at a disadvantage relative to State Farm because he represented himself at the arbitration hearing.⁴⁶ Clearly, he feels that he may do better at a rehearing now that he is represented by counsel.

Ms. Cohen may have an indirect interest in my finding on the consent issue raised in this appeal. But it is not obvious why she would want to obtain the hospital records improperly in March 1997 when she could easily obtain them properly. An arbitrator had ordered Mr. Ferenczi to consent to produce the records. If Ms. Cohen failed to obtain the consent due to an oversight, she could go back to Mr. Ferenczi at a later date. If Mr. Ferenczi refused Ms. Cohen's request to sign the authorization, State Farm's counsel could request a further order from the arbitrator, this time directed at the hospital. Ultimately State Farm could rely on a summons to compel a hospital official to bring the records to the hearing.

Far from having an interest in obtaining the records improperly, I find it more likely that Ms. Cohen would have an interest in obtaining them properly. Having been retained by State Farm's counsel, she can be presumed to know that the records she obtained might be relied upon in legal proceedings and that State Farm could be required to establish that they were properly obtained. Nor was I presented with any reason why State Farm or its counsel would prefer to obtain the records without proper authorization. Indeed, Ms. Cohen’s undisputed evidence that she obtained a summons for the hospital records suggests that her intention was to comply with the law.

Mr. Ferenczi does not deny that Ms. Cohen attended at his home and asked for his authorization to produce the bank records, or that he provided that authorization.⁴⁷ It is possible that Ms. Cohen intended to have him sign both sets of authorizations, and forgot the ones for the hospital records, but I find it more likely that she did as she set out to do. This task — obtaining authorizations — was one that is commonly within the ordinary and routine business of private investigators.

The hospital records staff would also have been acting within the course of their ordinary and routine duties in dealing with Ms. Cohen’s request for the records. They have no obvious interest in ignoring the law governing patient confidentiality and every interest in complying with it. I find Ms. Cohen's account of her dealings with the hospital cogent and believable. Ms. Cohen named the two staff people she deal with — Janet Raymond, a health records administrator, and "Ada," an x-ray technician.⁴⁸ She described their attempts to ensure they had authority to release the records. Though Ms. Cohen served Ms. Raymond with a summons, Ms. Raymond reportedly called her back to tell her she would need a consent to release the records in advance of the hearing. Ms. Ciccone checked with the records department to make sure consent had already been given.

I find Ms. Cohen’s evidence cogent and credible. I prefer her evidence over that of Mr. Ferenczi. I am satisfied that Mr. Ferenczi signed an authorization for release of the hospital records.

In any event, even if the records were released improperly, I do not accept Mr. Ferenczi's submission that the only appropriate remedy is to exclude them from the evidence. Arbitrators have a wide latitude in controlling the hearing process so as to ensure "the quickest, most just and least expensive resolution of the dispute." They are generally not bound by the rules of evidence that apply in a court.⁴⁹ In deciding whether to admit or exclude proffered evidence, an arbitrator must consider the underlying objectives of the rules of evidence and the relative prejudice to the parties. Where records ordered by a pre-hearing arbitrator have not been produced – or, as Mr. Ferenczi asserts, not properly produced – by the time the hearing starts, an arbitrator has several options. If the document seems to have trivial probative value, the arbitrator may exclude it in order to avoid an adjournment. This rarely happens because a party requesting a pre-hearing production order must prove that the requested document is likely to be material and probative. Another option is to proceed with the hearing on the understanding that the document will be produced at a later date. However, this may mean reopening the hearing to hear further evidence relating to the document. Where the document is important, the appropriate remedy in most cases is for the arbitrator to adjourn the hearing pending production, and order the at-fault party to bear the costs of the adjournment. The principle informing the choice of remedy is that the arbitrator should have sufficient evidence to conduct a full and fair hearing, and that this objective should be obtained with the least possible prejudice, cost and delay.

In this case, it would not have been appropriate to exclude the hospital records because they are clearly pivotal to State Farm’s case. If the arbitrator had found that the records were not properly obtained, the appropriate course would have been (i) to ensure production of the records — by means of a summons, third-party order or signed authorization; (ii) to adjourn the hearing pending production and review of the records; and (iii) to award costs of the adjournment to State Farm.

This means that the arbitrator did not make a potentially decisive error in admitting and relying on the hospital records, even if State Farm obtained them without Mr. Ferenczi’s authorization. I need no further evidence on this point, and the appeal hearing will proceed without further submissions about it.

Evidence of Paul Fernandes

Mr. Ferenczi also seeks to call Paul Fernandes to testify at the appeal hearing. Mr. Fernandes was Mr. Ferenczi's "chief employee"⁵⁰ at P & C Transmission, and worked with Mr. Ferenczi before and after the accident. He testified briefly at the arbitration hearing. Mr. Ferenczi questioned him only about his age, height, weight, and dominant hand. This testimony was in support of Mr. Ferenczi's allegation that it was Mr. Fernandes, rather than Mr. Ferenczi, who was depicted in certain surveillance videotape relied on by State Farm. Mr. Ferenczi submits on appeal that the arbitrator erred in not questioning Mr. Fernandes about his observations of Mr. Ferenczi's activities before and after the accident and about their business arrangements. He also asks me to listen to the audio tape of Mr. Fernandes' interview with Ms. Cohen, which he submits the arbitrator disregarded. As the audio tape was admitted into evidence at the arbitration hearing, and neither party challenges its authenticity, it will be included, as is normal, in the evidence under review on appeal.

However, at this preliminary stage, I am not satisfied that I should allow fresh evidence to be led from Mr. Fernandes at the appeal hearing. Mr. Ferenczi essentially seeks a new hearing on the basis that he was not represented by counsel at the arbitration hearing. I have no doubt that Mr. Fernandes would now prefer to have retained counsel before the arbitration hearing, but this is not a valid reason, on its own, to allow him to retry a selected portion of the evidence on which he relied.

At the appeal hearing, the parties should be prepared to present any oral submissions they may wish to add to their written submissions already filed. The appeal will be based on the evidence admitted at the arbitration hearing. Having considered the evidence in its entirety, if I am satisfied that the arbitrator committed reviewable error, possible remedies include rescinding or varying the arbitrator's order, or ordering a rehearing of the matter.

Mr. Brown: . . . . did you sign the consent that was given to you by Ms. Cohen to have them [the hospital records] released? Mr. Ferenczi: No. I signed only for the bank to this lady. Mr. Brown: Well, Mr. Ferenczi, the question was, did Ms. Cohen go to you and provide you with a consent to have those Northwest General Hospital records released? Mr. Ferenczi: No. Mr. Brown: She never went to you? Mr. Ferenczi: No. She went to me with the bank record.

Footnotes

1. 1Sometimes referred to as "P.C. Transmission."
2. 2Arbitration Exhibit 29.
3. 3Arbitration Exhibit 51.
4. 4Tab A, State Farm's Response to Mr. Ferenczi's Factum, submitted in the preliminary issue hearing. Mr. Ferenczi put forward a summary of legal fees paid to Mr. Gearing as late as July 1997: Arbitration Exhibit 24.
5. 5See Exhibit 36 (letter dated February 12, 1993), Exhibit 50 (letter dated April 7, 1992) and Tab 8 of Exhibit 38 (Report of Mediator, January 25, 1993).
6. 6The pre-hearing letter is found at Tab F of State Farm's Factum in the preliminary issue hearing (see pp. 4-5). The decision on a preliminary issue, dated March 23, 1997, is found at Tab G (see page 7). Correspondence from State Farm's counsel advising Mr. Ferenczi to retain new counsel is found at Tab B (November 15, 1996), Tab C (January 22, 1997), Tab D (February 7, 1997), and Tab E (March 7, 1997).
7. 7Rule 1.1. of the Dispute Resolution Practice Code (3rd ed.).
8. 8The Schedule is the Statutory Accident Benefits Schedule - Accidents before January 1, 1994. It is O.Reg. 672 of R.R.O. 1990, under the Insurance Act, R.S.O., c.I.8, as amended.
9. 9Unless additional benefits were purchased, which does not apply in this case.
10. 10The benefit calculation provisions are found in subsections 12(4) and 12(7) and section 15 of the Schedule. The Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and November 1, 1996 ("SABS-1994"), which succeeded the scheme in effect at the time of Mr. Ferenczi's accident, recognizes business losses resulting from the accident in subsections 10(6), (7) and (8).
11. 11(OIC P-009703, February 27, 1997). See also, for example, GAN Canada and Younathan (OIC P96-00088, July 29, 1997) and Halifax Insurance Company and Reith (FSCO 98-00037, July 16, 1999).
12. 12Kakesh and Lloyd’s Non Marine Underwriters, (August 19, 1992, OIC P-000378) and following cases.
13. 13Arbitration Exhibit 11.
14. 14Arbitration Exhibits 9 and 12.
15. 15Arbitration Exhibit 14.
16. 16Transcript, October 21, 1997, pp. 120 - 123.
17. 17Arbitration Exhibit 49.
18. 18Arbitration Exhibit 47.
19. 19Transcript, October 24, 1997, p. 58, Q. 144.
20. 20Ibid., p. 59.
21. 21Arbitration Exhibit 26.
22. 22Transcript, October 21, 1997, p. 47, Q. 229 and 230; p. 55, Q. 266.
23. 23Arbitration Exhibits 10, 15, 16, 17 and 22.
24. 24Arbitration Exhibits 17 and 24.
25. 25Arbitration Exhibit 48. According to Mr. Ferenczi's working copies. Certified copies of his income tax returns as filed were not available.
26. 26Arbitration Exhibit 18.
27. 27Arbitration Exhibit 9.
28. 28Transcript, October 20, 1997, p. 173, ll. 1-4. The debts Mr. Ferenczi was referring to in this statement were personal: the mortgage on his home, property and car insurance, etc.
29. 29Ibid., p. 69, ll. 13-17.
30. 30Arbitration Exhibit 27, p. 180, Q. 1096.
31. 31Transcript, October 23, 1997, p. 38, Q. 131.
32. 32Arbitration Exhibit 38, Tab 1.
33. 33In Francis and Halifax Insurance Company (OIC A-003987, February 10, 1998), Arbitrator Mackintosh accepted Mr. Edwards view that only a portion of rental income should be accepted as income from self-employment. Mr. Edwards used the same approach in that case as in this one. He advocates apportioning rental income or losses between the "ownership" and "operation" aspects of the business in the same proportion as the corresponding expenses. In Biliouras and Allstate Insurance Company of Canada (FSCO P98-00002, October 13, 1998), Director’s Delegate Draper rejected the appellant’s submission his profit from the sale of a rental property should be treated as income from "self-employment" within the meaning of sections 5 and 83 of the SABS-1994. He ruled that "self-employment" is not synonymous with "business" as that term is used in the Income Tax Act. "The test for self-employment is in section 5, requiring that the insured person 'is engaged in employment' for salary, wages, or other remuneration or profit. In my view, this working is more akin to 'carry on business' and should be given its ordinary meaning. This makes sense in a system that, at least in a general sense, deals with interruptions in activity due to accident-related injuries." That the appellant did only minor renovation work during the three years he owned the house was one of the factors considered.
34. 34Arbitration Exhibit 27, p. 179, Q. 1088-1090.
35. 35Arbitration Exhibit 2.
36. 36According to the arbitrator, he also claims injuries to his right hand, right elbow, right shoulder, neck, right side of his face, low back and left knee, but his wrist and shoulder injuries "by all accounts" are "the major sources of his disability to work as an auto mechanic."
37. 37Exhibit 1.
38. 38Exhibit 37.
39. 39Transcript, October 27, 1997, p. 31-36.
40. 40Affidavit of Marilyn Carol Jennings, sworn October 29, 1998: Tab 4 of Mr. Ferenczi's factum.
41. 41Letter from Anne Clin, Risk and Quality Specialist, Humber River Regional Hospital (the successor to Northwestern General Hospital), dated March 15, 1999.
42. 42Presumably Ms. Raymond felt she needed the consent to authorize production in advance of the hearing, since the summons would be returnable on the date of the hearing without further authorization from Mr. Ferenczi.
43. 43See, for example, Shelley L.P and Royal Insurance Company of Canada (OIC P-002235, June 23, 1995).
44. 44In any event, subsection 11(7) of the Insurance Act states that "A person who is appointed as an arbitrator for the purposes of an arbitration under this Act shall not be required to testify in a civil proceeding or in a proceeding before any tribunal respecting any arbitration performed under this Act or respecting information obtained in the discharge of the person's duties under this Act." Subsection 11(5) makes mediators non-compellable.
45. 45The Statutory Powers Procedure Act, R.S.O.c.S.22, gives FSCO adjudicators discretion to admit evidence whether or not it is admissible in a court of law, except for anything that is inadmissible pursuant to the laws of privilege or statutory rules. Arbitration and appeal decisions have held that "The principles underlying the rules [of evidence] should inform an [adjudicator's] approach."— Salvaggio and Simcoe and Erie General Insurance Company (FSCO P97-0062, January 21, 1999). Affidavit evidence would not normally be admitted on a critical issue in dispute between the parties, where the deponent could be made available for cross-examination. In this case, State Farm relies on the affidavit in relation to a collateral issue.
46. 46Appellant's Factum, pp. 15-18.
47. 47Transcript, p. 32:
48. 48The receipt appended to Ms. Cohen’s factum appears to be signed by "Ada Ciccone."
49. 49Section 15, Statutory Powers Procedure Act, R.S.O. 1990, Chap. S.22.
50. 50Applicant's Factum, para. 12.