Financial Services Commission
Commission des services financiers de l’Ontario
Neutral Citation: 1999 ONFSCDRS 3
Appeal P98-00012
OFFICE OF THE DIRECTOR OF ARBITRATIONS
PATRICK HALPIN
Appellant
and
PERSONAL INSURANCE COMPANY OF CANADA
Respondent
Before: David R. Draper, Director's Delegate
Counsel: Ronald F. Caza (for Patrick Halpin) Kevin L. LaRoche (for Personal Insurance)
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal is dismissed and the arbitration order dated February 17, 1998 is confirmed.
No appeal expenses are payable.
January 6, 1999
David R. Draper Director's Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
This is an appeal by Patrick Halpin from an arbitration decision dated February 17, 1998. He claims the arbitrator erred in concluding that he is not entitled to income replacement benefits after September 25, 1995.
II. BACKGROUND
Mr. Halpin is a former air traffic controller who worked 35 years for Transport Canada. Starting in 1990, he had some personal setbacks. Financial problems forced him to sell a farm that he was hoping to operate as a retirement project. He had to take time off work due to depression and "burnout," leading to early retirement in February 1992, at 56 years of age. He was also having marital problems, separating from his wife in December 1992.
In early 1993, Mr. Halpin was looking to rebuild his life. He approached an old friend, Mr. Léo Fontaine, who owned an 80-acre organic farm. Mr. Fontaine also owned a construction company that was keeping him from spending much time on the farm. The two men agreed that Mr. Halpin would work the farm in exchange for lodging in Mr. Fontaine's farmhouse and 40 per cent of whatever profit the farm generated.
The arbitrator made findings about the early farm operations that are not challenged on appeal. In the spring of 1993, Mr. Halpin started working the farm. He planted about half an acre of organic tomatoes, about three acres of cucumbers and about 12 acres of corn. Mr. Fontaine planted about 20 acres of buckwheat. Together, they did some work on the farmhouse, with Mr. Halpin taking up residence in August 1993. The two men discussed plans for the expansion of the operations, including growing and marketing a wider variety of vegetables and keeping animals such as beef cattle and chickens.
The first harvest was modest and no profits were earned. That fall, Mr. Halpin enrolled in organic gardening courses at a local agricultural college. In December 1993, he went to Manitoba to look after his mother, who was ill. He returned to the farm in March 1994, but one month later, he learned that his brother in Saskatchewan was also seriously ill. Mr. Halpin went to Saskatchewan, arriving the day before his brother died. After the funeral, he went to Manitoba to spend time with family members, including his ailing mother.
The accident occurred on April 22, 1994, while Mr. Halpin was still in Manitoba. He suffered injuries, including broken ribs and a punctured lung. After spending 10 days in the hospital, Mr. Halpin stayed with his sister until the end of May, when his doctors allowed him to fly home to Ontario.
Mr. Halpin applied for accident benefits on his return to Ontario. His insurer, Personal Insurance Company of Canada ("Personal"), arranged for rehabilitation services and paid income replacement benefits ("IRBs"). After completing physiotherapy and just as he was about to start a rehabilitation program, Mr. Halpin's mother was hospitalized again. He flew back to Winnipeg and stayed with her until her death at the end of July 1994.
Mr. Halpin returned to Ontario at the end of August 1994, but did not go back to the farm. Instead, he rented an apartment in Ottawa and continued with his rehabilitation. He did not pursue his studies or follow-up the plans for the farm.
Personal continued to pay IRBs, but advised Mr. Halpin in July 1995 that it intended to stop paying on the basis that he could return to his pre-accident employment with some modifications. Mr. Halpin objected and asked for an assessment by a Designated Assessment Centre ("DAC"). Based on the DAC assessment, Personal discontinued paying IRBs on September 29, 1995. Its position was that Mr. Halpin could do his farm work with modifications for the heaviest tasks. In the alternative, Personal claimed that he had failed to mitigate his losses by not pursuing other work.
The arbitration hearing took place over five days in March and April 1997, with written submissions filed later. The arbitrator released her decision on February 17, 1998, concluding that Mr. Halpin was not entitled to any additional IRBs. Mr. Halpin appeals from this order.
III. ANALYSIS
On appeal, Mr. Halpin presents two major arguments. First, he claims the arbitrator imposed an inappropriately high burden of proof on him due to his friendship with his employer - Mr. Fontaine. Second, Mr. Halpin argues that the arbitrator erred in defining his essential tasks. In his submission, she failed to take adequate account of the changes in his duties that would have taken place if the plans for the farm had not been interrupted by the accident.
A. Burden of Proof
Mr. Halpin claims that the arbitrator's decision reflects a bias that undermines the result. In support of this contention, he points to the following passage from page 13:
I view Mr. Fontaine's evidence with some skepticism because he was not only Mr. Halpin's employer, he was also his old friend and associate. There was no "arm's length" relationship between the two men, no contract of employment or documented job description; merely an oral agreement as to the arrangements between them. Neither Mr. Halpin nor Mr. Fontaine is a disinterested witness. Mr. Halpin has an interest in showing that his essential tasks are so numerous and physically demanding as to be beyond his capacity, after the accident. Mr. Fontaine is interested in supporting his friend.
Later, in a footnote on page 19, the arbitrator states:
Mr. Halpin relied on Baldassara and Wellington Insurance Company (March 13, 1995), OIC A-005088, as authority for the proposition that it is up to the employer to approve modifications. That reasoning would apply in a situation where the employer and employee have an arm's length relationship, which is not the case here.
In Mr. Halpin's submission, these excerpts show that the arbitrator approached the case with an inappropriate level of scepticism based on his friendship with Mr. Fontaine. While I accept that this is a sincere reaction to the arbitrator's decision, I am not convinced it is a fair reading.
Mr. Halpin's claim is based on a job for which there is little documentation. Nevertheless, the arbitrator largely accepted his evidence, supported by Mr. Fontaine, about the nature of his duties. The contentious questions at the arbitration were whether their planned changes to the farm's operations should be considered in defining Mr. Halpin's essential tasks, and whether any of his heavier duties could be modified. The excerpts to which Mr. Halpin objects respond directly to these issues and should be viewed in that context.
The first excerpt is not a general comment on Mr. Fontaine's credibility. In the previous paragraphs, the arbitrator refers to two decisions in which anticipated job changes were considered. She notes that both involved situations where the person had taken definite and positive steps toward the realization of their plans, including actually starting the work in one case, and making significant financial outlays in the other. In considering whether there was a similar level of certainty here, she finds that Mr. Fontaine, not Mr. Halpin, controlled whether the planned expansions of the farm's operation would proceed. Finally, she refers to Mr. Fontaine's testimony. Although he agreed in cross-examination that he wanted the "market-garden" stage of the operation to be profitable before expanding, he insisted that he had every intention of carrying out all the plans.
The arbitrator's "skepticism" is in relation to Mr. Fontaine's insistence that Mr. Halpin's role on the farm would definitely be expanding. This is precisely the kind of assessment arbitrators must make with respect to contested evidence, and should not be disturbed on appeal.
The decision also makes it clear that the arbitrator did not simply reject Mr. Halpin's contention that his evolving role should be considered. Instead, she looked at the steps that had been taken, stating that he had to show that "significant steps had been taken towards the implementation and realization of the plans for the farm." For reasons discussed in more detail below, I find nothing wrong with this test, or the arbitrator's application of it.
The parties also disagreed about whether Mr. Halpin's heavier duties could be modified. The arbitrator states at page 19 that while Mr. Halpin raised many practical objections, his ultimate position was that any modifications were subject to Mr. Fontaine's approval. Mr. Fontaine testified that he was not prepared to change or modify any of the work methods or routines to accommodate Mr. Halpin, and did not want to run the risk of having an injured person working on his farm.
Again, the arbitrator had to assess this evidence. Viewed in context, I find that the footnote to which Mr. Halpin objects is meant only to distinguish the decision in Baldassara and Wellington Insurance Company, (OIC A-005088, March 13, 1997), a case that clearly is distinguishable. Mrs. Baldassara was employed as a cashier by Oshawa Foods, whose manager of employee relations testified that the company would only modify a cashier's job if required to do so by the Workers' Compensation Board. Based on this evidence and changes to the store where Mrs. Baldassara had worked before her accident, the arbitrator found that the kind of gradual, modified return to work that Mrs. Baldassara needed was not available through her previous employer. I do not read this decision as standing for the proposition that an employer's assertion that it will not accommodate an employee's disability ends the inquiry.
The arbitrator properly considered the evidence about the feasibility of modifying Mr. Halpin's job tasks. She rejected the suggestion that any changes were strictly within Mr. Fontaine's control. I am not persuaded that this was based on a generalized refusal to accept the evidence of a friendly employer. It was a specific finding in this case. As the arbitrator explains on pages 20 and 21, there was conflicting evidence. Most importantly, both Mr. Halpin and Mr. Fontaine testified that while they jointly developed the plans for the farm, Mr. Halpin generally worked alone and controlled how the work was done. In the circumstances, there is ample evidence to support the arbitrator's conclusion that Mr. Halpin could have modified his approach to some of the heavier tasks.
Addressing Mr. Halpin's position directly, I do not accept that the arbitrator should have treated him as if he were a typical employee working according to rules set by his employer. That simply was not the situation. There was no job until Mr. Halpin approached Mr. Fontaine. Mr. Halpin was integrally involved in the planning for the farm and worked it with little day-to-day involvement from Mr. Fontaine. Finally, when Mr. Halpin was injured, Mr. Fontaine did not replace him.
For these reasons, I am not persuaded that the arbitrator imposed an inappropriately high burden on Mr. Halpin.
B. Essential Tasks
The test for IRBs is set out in sections 7 and 8 of O. Reg. 776/93, as amended, the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996 ("the SABS-1994"). Because Mr. Halpin was employed as a foreman/manager on the farm at the time of his accident, he qualifies as long as he suffers a substantial inability to perform the essential tasks of that employment. The parties agreed about Mr. Halpin's physical condition, but disagreed about his essential tasks. While the arbitrator accepted his contention that they are not strictly limited to what he did before the accident, she did not define them as broadly as he suggested.
At page 12 of her decision, the arbitrator states (footnotes omitted):
The long-settled case law has established that essential tasks are the "necessary and key tasks that were normally performed before the accident" and that to determine the essential tasks, "an individualized inquiry into the circumstances of the particular applicant" is required. The case law also indicates that the essential tasks cannot be based on a single "snapshot" of the person's activities just prior to the accident. I agree that, where a business is still in the planning stages and not yet fully operational, it may be appropriate to include as essential tasks the duties that were planned for, as well as tasks and duties that had been actually performed. However, this requires a careful consideration of the specific plans in each case, and a determination that the plans speak to a well-prepared-for reality rather than merely a speculative possibility.
I agree with this analysis. In most cases, the injured person's essential tasks will be based on his or her duties at the time of the accident. Anticipated changes, such as likely promotions or future prospects, generally will not be considered. Unlike common law tort actions, the SABS-1994 does not contemplate an individualized assessment of future economic loss. Rather, rules are created to help clarify the insurer's obligations so benefits can be paid without delay. The essentially backward-looking nature of these rules is illustrated by the sections dealing with the calculation of IRBs. Unless the injured person has a future contract of employment, his or her benefits will be calculated based on past, not future income - income from employment over the 4, 52, or 156 weeks before the accident.
Despite this general approach, I agree with the arbitrator that some flexibility is required. In some situations, the person's employment must be seen as including tasks that he or she was not performing at the time of the accident. For example, consider someone hired to do a particular job, but is still in training at the time of the accident. It would make little sense to consider only the tasks involved in the training because that would not fairly represent the essential tasks of the employment. As the arbitrator states, each case must be considered on its own facts. Where the injured person is employed at the time of the accident, a realistic assessment of the essential tasks of that employment is required.
The situation here is complicated because the plans for the farm were still in their early stages and were interrupted by Mr. Halpin's family problems. Although Mr. Halpin was not actually working the farm at the time of his accident, the parties agreed that this was the appropriate job referent. The arbitrator focuses appropriately on what his tasks would have been at the time of the accident, finding that they would not have changed greatly from the previous year. On pages 13 to 18, she carefully explains how she determined Mr. Halpin's essential tasks. In my view, nothing in the arbitrator's reasons suggests an overly narrow or rigid approach.
At the appeal hearing, Mr. Halpin extended his argument, claiming his essential tasks should not be based on the time of the accident, but what they would have been in September 1995, seventeen months after the accident, when his IRBs were cancelled. I do not accept this argument. For the reasons set out above, the test is based on the employment in which the injured person was engaged at the time of the accident. While this requires a realistic assessment of the essential tasks of that employment, it is unlikely that it would ever be appropriate to consider changing job tasks over such a lengthy period.
Finally, there is another, perhaps more fundamental problem with Mr. Halpin's position. As discussed above, his employer, Mr. Fontaine, testified that the expansion of the farming operations was dependent on profitability. He agreed that he wanted the "market-garden" stage of the operation to be profitable before investing in cattle and other projects. This finding is not challenged on appeal. It is important because at the time of the accident, the farm had not reached profitability. As a result, I agree with Personal's contention that Mr. Halpin failed to establish that his job tasks would have evolved in the manner he claims.
For these reasons, the appeal is dismissed.
IV. EXPENSES
Because the new expense provisions came into effect after this dispute was already in arbitration, the old rules apply. This means that expenses can only be awarded in favour of the insured person, not the insurer.1
Mr. Halpin requests his appeal expenses. Personal argues that not only should expenses be denied, but that he should be ordered to pay an assessment under s. 282(11.2) of the Insurance Act, R.S.O. 1990, c.I.8, as amended. In its submission, Mr. Halpin attempted to challenge the arbitrator's interpretation of the evidence by inappropriately asserting facts beyond those set out in the decision without ordering a transcript.
I agree that Mr. Halpin's written submissions stray too far into stating "facts" not accepted by the arbitrator. This is a persistent problem in appeals that counsel are advised to avoid. However, I am not persuaded that the transgression here is sufficiently serious to justify an assessment against Mr. Halpin. His appeal raised legitimate issues and, generally, the written and oral submissions were helpful. As a result, the parties will bear their own appeal expenses.
January 6, 1999
David R. Draper Director's Delegate
Date