Neutral Citation: 2000 ONFSCDRS 28

FSCO A98-000053

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PETER PRICE

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Beth Allen

Heard:

October 19, 20, 21 and 22, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Daniel Balena for Mr. Price

Peter Kazdan for Liberty Mutual Insurance Company

Issues:

The Applicant, Peter Price, was injured in a motor vehicle accident on May 27, 1997. He applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty Mutual"), payable under the Schedule¹. In my decision on a preliminary issue dated November 27, 1998, I decided that Mr. Peter Price was not excluded by subsection 30(2)(b) of the Schedule from receiving weekly income replacement benefits (IRBs).

This entitled Mr. Peter Price to pursue his claim for IRBs and to dispute the quantum of the benefit. He claims that at the time of the accident he earned both employment and self-employment income. The parties agreed on the quantum of his employment income (and hence the amount of the IRB based on this income, i.e. $81.30 weekly), but dispute the amount of his self-employment income. Liberty Mutual agreed on an interim basis to pay Mr. Peter Price, from the date of the accident until October 7, 1998, IRBs in the amount of $81.30 weekly, to be applied against any IRBs I may order in the event that Mr. Peter Price were to succeed on the disability issue.

During the period between the first and the present sitting in this matter, the parties also resolved the issue of Mr. Peter Price's entitlement to IRBs up to the 104-week point after the accident. Therefore, the only issue remaining in dispute is the amount of that portion of Mr. Peter Price's IRB that would be calculated based on his self-employment income.

The parties were unable to resolve the quantum issue and proceeded to 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. What is the correct amount of Mr. Peter Price's IRB pursuant to section 6 of the Schedule? Should his self-employment income be considered in calculating his benefit?

2. Is Mr. Peter Price entitled pursuant to subsection 282(11) of the Act, to his expenses incurred in respect of the arbitration hearing?

Result:

1. Mr. Price is entitled under section 6 of the Schedule, from October 8, 1999 onwards, to an IRB of $81.30 per week with interest, as agreed, calculated based solely on his employment income.

2. The parties may now address the expense issue.

EVIDENCE AND ANALYSIS:

Background to this Proceeding:

At the first sitting of the hearing, I heard evidence on the quantum issue in relation to Mr. Peter Price's self-employment income. I expressed concern in my November 27, 1998 decision about problems with Mr. Peter Price's recall of aspects of his pre-accident self-employment. I found this particularly problematic in view of the fact that the evidence of his other witnesses on his self-employment was reconstructed after-the-fact and largely unsupported by documentary evidence. I decided that I would not hear closing arguments on the quantum issue until I heard the evidence on the disability issue. My thinking was that the medical evidence might assist me in determining whether credibility problems, as Liberty Mutual alleges, or an underlying medical condition, as Mr. Peter Price claims, explains his memory problems. However, subsequent to the first sitting, the parties resolved the disability issue. This being the case, the parties would normally not be required to call medical evidence. I therefore decided that medical evidence specifically bearing on Mr. Peter Price's alleged memory and cognitive problems would be helpful in assessing his testimonial evidence on the quantum issue. I am particularly interested in his memory of his self-employment work during the 52 weeks before the accident. In this connection, I allowed the parties to call a number of medical witnesses before presenting their closing arguments on the quantum issue.

The Accident:

Since I deal with an aspect of Mr. Peter Price's injuries from the accident, I will recount some of the pertinent facts of the accident.

The accident occurred on May 27, 1997, at 1:00 a.m. Kevin Trotter was driving the car, Mr. Peter Price was the front seat passenger, and Sharon Keyworth and Amanda McGill were back seat passengers. Before the four set out that evening, they had each consumed a number of beers. The car ran a stop sign, hit a gravel surface and rolled over onto its roof. The police and ambulance arrived and Mr. Peter Price and the others were transported to a local hospital. Mr. Peter Price sustained a number of physical injuries including a chance fracture at L-1, a collapsed lung, and ruptures to both his liver and spleen. He was hospitalized for about 60 days.

Cognitive Disability Evidence:

When testifying about his pre-accident self-employment work, Mr. Peter Price's memory seemed to have gaps and to be sketchy in parts. He testified that he has no memory of the accident and that his last pre-accident memory was of being at the Trotters' garage several hours before the accident.The evidence is conflicting as to whether or not he lost consciousness immediately after the accident. There is also an issue as to the extent to which, if at all, he suffers from cognitive problems that affect his recall of facts related to his pre-accident self-employment. The medical experts who testified for Mr. Peter Price base their medical opinions on a diagnosis of an organic head injury, whereas those who testified for Liberty Mutual opine that the injury was inorganic.

The medical witnesses who assessed Mr. Peter Price distinguished various types of memory: remote memory, pre-traumatic or retrograde memory, post-traumatic memory, recent memory and short-term memory. They explained that their testing and assessments of Mr. Peter Price's memory problems focussed mainly on his recent memory. Little, if any, assessment was done of his pre-accident remote memory. Since I am concerned with Mr. Peter Price's memory of his self-employment activities in the year before the accident, evidence on remote memory is most pertinent to the area of inquiry before me. For this reason, I find very little of the documentary and testimonial evidence on memory to be of assistance to me. I considered only the medical evidence pertinent to the effect, if any, that the accident might have had on Mr. Peter Price's remote memory relating to his self-employment activities in the year before the accident.

Dr. Andy Cancelliere (a neuropsychologist) and Dr. Marvin Weber (a neurologist) testified for Mr. Peter Price. Dr. Robert Notkin (a psychiatrist), Dr. Lawrence Freedman (a neuro-psychologist) and Dr. Hart Schutz (a neurosurgeon) testified for Liberty Mutual. These witnesses largely agreed that Mr. Peter Price's head injury would not have significantly affected his remote memory of the self-employment work he performed in the year before the accident.

Since the disability issue is not before me, I make no findings on whether Mr. Price suffered an organic or inorganic head injury. I conclude based on the medical experts' evidence that Mr. Price's memory of his pre-accident self-employment work was not seriously affected by the head injury he sustained in the accident.

Parties' Submissions:

Mr. Peter Price argues that in the 52 weeks before the accident, he was self-employed as a home renovator and the income he earned from this should be taken into account when calculating his IRB. He testified about this work, as did his father, Stanley Price, and seven other persons (not including Mr. Keith Bragg) on whose properties Mr. Peter Price claims he did renovations. Mr. Peter Price claims that when his self-employment income is considered together with his employment income, his IRB would be $310.84, excluding the value of the work on the Bragg property.

Liberty Mutual submits that Mr. Peter Price failed to prove that he earned self-employment income and hence the amount of his IRB should not exceed $81.30. Liberty Mutual brought evidence to challenge the credibility of Mr. Peter Price's evidence that he earned self-employment income during the year before the accident. Liberty Mutual submits that during this period, Mr. Peter Price was either unemployed or employed elsewhere at times when he claims he was doing renovations.

Evidence and Findings:

The Renovation Jobs

Mr. Stanley Price testified that since age 19, Peter had been doing odd jobs like landscaping and building home decks and recreation rooms. He stated that before the accident, he assisted Peter to get jobs by spreading the word about his work throughout Oshawa. Mr. Stanley Price also stated that because Peter was in the hospital after the accident, he set out on his son's behalf to determine for whom he had done work (these persons are collectively referred to as the "homeowners") so that the income Peter earned might be considered in calculating his IRB. Mr. Stanley Price obtained handwritten, undated letters from the homeowners, identifying the work done and the associated costs, which Mr. Peter Price filed as evidence. Mr. Stanley Price also took photographs of the various jobs in the days before the hearing which were also filed as evidence.

The homeowners, with the exception of Mr. James Baker, reside in Oshawa, Ontario, as do Peter Price, his spouse, Karen Baker, and his father. The homeowners (with the exception of Stanley Price and Mr. Reginald Davison who supplied their own materials) stated that they paid Peter in cash to cover both labour and materials, but indicated they were not aware of how Peter applied the funds as between labour and materials. These homeowners stated that they paid Mr. Peter Price in installments but they could not recall the details of the installment arrangements. Further, the homeowners stated either that they did not obtain, or could not recall whether they obtained, receipts from Peter for their cash payments to him and hence did not produce receipts for the hearing.

The Work at Keith Bragg's House

The evidence pertaining to Mr. Bragg is problematic for a number of reasons. It was originally Mr. Peter Price's intention to call Mr. Bragg as a witness, but, for reasons detailed below, his counsel indicated that Mr. Bragg was no longer a witness for the Applicant and that he was withdrawing Mr. Bragg's evidence. He submitted that the cost of the work stated in Mr. Bragg's handwritten letter should not be considered in calculating Mr. Peter Price's self-employment income. Liberty Mutual decided at the hearing to call Mr. Bragg as its witness for the purpose of impeaching Peter Price's and his father's credibility.

Mr. Stanley Price explained the background to Mr. Bragg's involvement in this matter. He testified that in his search for people for whom his son had done renovation work, he raised the matter at a community fellowship meeting where he and Mr. Bragg are members. He stated that Mr. Bragg came forward and announced that Peter had done work at his home. Mr. Stanley Price testified that Mr. Bragg's wife wrote a letter detailing the work and the cost, which Mr. Peter Price filed as evidence and then withdrew because of events that transpired just before the hearing.

When Mr. Bragg testified, he denied knowing Peter Price and that Peter had done work for him. Mr. Bragg stated that he did the work himself. He testified that the information in the note his wife wrote is untrue and he stated that Stanley Price stood over her while she wrote and dictated to her what to write. Adding to the confusion around this evidence, Mr. Peter Price confirmed Mr. Bragg's evidence, testifying that he did not know Mr. Bragg and did not recognize the work in the picture of Mr. Bragg's house.

According to Mr. Stanley Price, after Mr. Bragg received a summons to attend the hearing, Mr. Bragg informed him that he would not attend the hearing because he would lose pay from work. Mr. Stanley Price testified that Mr. Bragg told him that Liberty Mutual offered to pay him to testify, and if he (Stanley Price) would "grease his palm", he would testify for Peter. In his testimony, Mr. Bragg denied telling Mr. Stanley Price that Liberty Mutual offered conduct money. Mr. Stanley Price testified that when he attended at the Bragg's home prior to the hearing to take pictures of the work, Mr. Bragg grabbed him and pushed him from his porch.

When cross-examined, Mr. Bragg first stated that he did not receive $100 conduct money when the process server (for Mr. Peter Price) served him with a summons. After further questioning, he admitted he was lying and that he did receive the $100, but he maintained that Peter did not do the work at his house.

I accept the evidence that Mr. Bragg and Mr. Peter Price do not know each other and that Peter did not do the Bragg renovation. However, I did not receive an explanation for why Peter Price planned to call Mr. Bragg as a witness and to have the cost of the Bragg job included in the self-employment income calculation. I find perplexing why, under the circumstances, Mr. Peter Price's counsel waited until the hearing to advise that he would not call Mr. Bragg as a witness. I conclude that the failure to explain this rather glaring problem weakens the reliability of Mr. Peter Price's evidence as a whole.

The Other Homeowners' Evidence

Mr. Stanley Price testified that he had been employed for 23 years as a stock keeper for Oshawa Transit, but that he had done some construction work throughout his life. He stated that he helped somewhat with Ms. Janette Laffin's renovations, and might have helped with other jobs, but that Peter did not pay him for this. He stated that Peter negotiated his own contracts and that at the time the work was done, he was not aware of the costs associated with the various jobs.

Mr. Stanley Price testified that he saw Peter doing some of the jobs and saw the completed work at Ms. Janette Laffm's, Mr. Blaine Lukawesky's, Mr. Fred Fenton's and Mr. Peter Johnson's. He also stated that he was aware that each year, Peter cut wood for Mr. James Baker. He stated he was not able to provide pictures of the work Peter did at his (Stanley Price's) house. Mr. Stanley Price testified that in June 1996, Peter built a front deck, a patio with a fence and a gate and landscaped the rear yard with a garden and a hedge. He testified that he (Stanley Price) supplied the materials and paid Peter $1,200 cash for labour.

Ms. Laffin testified that she had known Mr. Peter Price for about seven years before he did the renovations on her home. She testified that she has been dating Mr. Peter Price's father for about seven years and was cohabiting with him at the time of the renovation and the accident. Ms. Laffin also stated that Mr. Reginald Davison, one of the other homeowners, is her father and Mr. Fenton, another homeowner, is her neighbour. She testified that Peter started work on her house in July 1996 and finished around October or November 1996. Ms. Laffin stated that she paid Mr. Peter Price $8,500. According to her evidence, Peter built a basement apartment and side and basement entrances to the house. He also constructed steps, a walkway, a deck, installed a new roof and put in a flower bed.

Mr. Lukawesky, a neighbour of Mr. Peter Price, testified that Mr. Peter Price built an 8 foot by 32 foot deck, a fence and a gate for his house around June 1996, for which he paid Peter $3,200. Mr. Lukawesky testified that he knew Peter's father and he (the father) recommended Peter's work. Mr. Lukawesky testified that he forgot to indicate in his handwritten letter that Peter had also built a gate and fence.

Mr. Fenton testified that he did not know Mr. Peter Price before he did the work on his house. He stated that he found out about Peter through Peter's father. Mr. Fenton also indicated that from June or July 1996 until the fall, Mr. Peter Price cut a wall and installed a patio door; built an 11 foot by 16 foot deck with railings and stairs to the back yard; and a platform deck to be assembled around a trailer. Mr. Fenton indicated that Peter built the deck and he (Mr. Fenton) painted it. He stated that he paid Peter $4,800.

Mr. Davison, Ms. Laffin's father, testified that he did not know Mr. Peter Price before he did the work on his house. He said his niece told him about Peter's renovation skills and he hired him in June 1996 to do renovations, which he completed around May 1997. Mr. Davison also testified that Peter added a new bedroom to his house; renovated the family room and built new bookcases; installed a new back door; renovated the bathroom; installed new taps throughout the house; decorated the living room and two bedrooms; installed carpet in two bedrooms; and repaired the roof, at a total cost to Mr. Davison of $3,485.² Mr. Davison indicated that he purchased the materials in early 1996, but Peter did not start the work until June of that year.

Ms. Baker, Mr. Peter Price's spouse of 11 years, testified for her father, James Baker, who could not attend the hearing due to health reasons. She confirmed that Peter has been doing construction and home renovation work since he left high school. She testified that she had no reason to doubt the truth of the contents of her father's handwritten letter. Ms. Baker testified that Peter annually cuts wood for her father who lives in Arden, a town two-and-a-half hours from Oshawa. She indicated that Peter did this work for her father from August 5, 1996 to September 27, 1996 for which her father paid him $3,200. Ms. Baker noted that her father keeps daily journals so she is certain this is the period Peter worked. Ms. Baker also testified that Peter stayed in Arden during this period and expressed uncertainty as to whether he returned to Oshawa at any time before the completion of the job.

Mr. Peter Johnson and Mr. Darrel Tully are homeowners who were not able to testify at the hearing. Mr. Stanley Price stated that Mr. Johnson, an elderly man who resides across the street from Ms. Laffin, could not attend the hearing because he was hospitalized. He further testified that he saw his son remove Mr. Johnson's old deck and build a new one. Mr. Stanley Price indicated that Mr. Tully is his niece's husband and that Peter had built a playhouse for $800 in the fall of 1996. He testified that while he saw the completed playhouse and took the picture, he did not see Peter building it.

Mr. Peter Price's Evidence on the Renovation Jobs

Mr. Peter Price testified that as a result of the accident, he has problems recalling some past events. His counsel adduced much of his evidence-in-chief by refreshing his memory by showing him the letters and photographs. After his counsel showed him each of the homeowners' letters and the pertinent photographs, Mr. Peter Price seemed to have good recall of having done the various renovation jobs. He also confirmed the dates he did the jobs. From the limited contents of the pictures, Mr. Peter Price, for the most part, recognized whose house was associated with a picture shown to him. However, as noted earlier, he did not recognize the work at the Bragg house. After viewing the letters, he testified that he recalled the respective homeowners paying him each of the amounts cited in their letters.

While in most cases he remembered whether he had bought materials, for some jobs he did not. For example, he recalled that Mr. Tully had purchased all the materials for his playhouse, but he did not remember whether he or Mr. Johnson had purchased the materials for his deck. Mr. Peter Price also had some specific memories. For instance, he recalled that Mr. Davison paid $200 for a door and that he had demolished an old deck at the Johnson's and replaced it with a new one.

Despite the weaknesses in the evidence, I accept that Mr. Peter Price did the wood cutting job for Mr. Baker and the renovations at the homes of his father, Ms. Laffin, Mr. Lukawesky, Mr. Fenton, Mr. Davison, Mr. Johnson and Mr. Tully.

Mr. Peter Price testified that post-accident, he did not assist his father with estimating the costs of materials because he was undergoing physiotherapy. He testified that he had no particular memory (in relation to the jobs where he purchased the materials) as to how much he kept as income and how much he spent on materials. He indicated that he did not remember where he purchased the materials. Mr. Peter Price stated that he recalled speaking to his father about this in 1997, but he explained that he had no input in preparing, and did not recall, the undated, handwritten document (Exhibit 3, Tab 24, referred to as "the handwritten document") he submitted as evidence. Nor did he know, for the jobs he was questioned about, where the figures for materials came from. Mr. Peter Price indicated that he did not understand the handwritten document, but filed it to assist in determining the labour/material split on each job and the amount of his IRB. These problems have inevitably contributed to the other shortcomings in the evidence.

However, regarding Mr. Peter Price's memory problems, I am not persuaded, as Liberty Mutual has urged, that credibility problems lie behind his difficulties remembering certain facts and events. I find that he recalled some significant facts, such as the costs of the jobs, the dates he did the jobs and was able from the photographs, to associate a particular project with the related homeowner's property. I conclude that the evidence reveals that Mr. Peter Price principally had problems recalling where materials were purchased, as well as the cost of materials for each job, and therefore, the amount he retained as income. I find this evidence tends to be consistent with the findings of his own medical experts and those retained by Liberty Mutual. As noted above, although the experts disagreed on whether the head injury was organic or inorganic, they commonly agreed that Mr. Peter Price's injury would not significantly affect his remote memory of the period 52 weeks before the accident, particularly about large jobs and other events in his life. On the basis of this, I find that his head injury is not likely the source of his memory problems.

I find Mr. Peter Price's problem in recalling particularly the labour/material splits, is likely the result of factors other than poor credibility. In coming to this conclusion, I took into account that at the hearing, Mr. Peter Price was required to look back about two-and-a-half years to recall details that might have been difficult for the average person to remember. I also note that his school records, which were filed into evidence, reveal that his mathematics grades in secondary school were generally quite poor. This is consistent with his testimony that he is not good with numbers. Therefore, his lack of facility with mathematics might reasonably have contributed to his problems with the numbers and dollar figures associated with the various jobs. As well, the question of head injury aside, between the time Mr. Peter Price completed the renovations and the date of the hearing, he was involved in a traumatic accident requiring a lengthy hospitalization for many physical injuries. I find it is reasonable to conclude that this experience might have intervened in his life and affected his memory for some details of his pre-accident activities.

The Amount of Mr. Peter Price's Self-Employment Income:

Accounting Evidence

The handwritten document appears to list the costs associated with 11 jobs (without the homeowners' names) and purports to be a statement of the individual and total amounts paid to Mr. Peter Price ($34,950) and divides the total amounts as between labour ($26,285) and materials ($8,100). It also appears to include a list of tools with prices and what appears to be the amounts for gas and telephone expenses totalling $2,874. Mr. Peter Price further testified that his father supplied this information, which he (Stanley Price) gathered from the homeowners, to the accountants to prepare a formal statement of his income.

Although it is not entirely clear, it seems that Stanley Price prepared the labour/material split figures in 1997. He provided the information to Peter's accountant (Kenneth R. Craven, Chartered Accountant) and Liberty Mutual's accountants (J.P. Flanagan & Associates Ltd.) who prepared reports in 1997 and 1998. The October 16, 1998 Flanagan report indicates that the accountants obtained the self-employment information from the handwritten document. When cross-examined, Mr. Stanley Price testified that he did not remember preparing the handwritten document, although there appears to be a notation on the top left corner of the document stating "information supplied by Peter Price's father". He first testified that it appeared to be his writing on the document, then on closer inspection, expressed some doubt. He then specifically pointed to the list of tools and prices, and said he doubted that he wrote this.

When cross-examined about self-employment expenses like travel and tools, Mr. Stanley Price denied that Peter had any such expenses. Mr. Stanley Price testified that Peter had all the tools he needed for the jobs and did not have to purchase any, and that he at times picked up and drove Peter around. However, the Flanagan and Craven reports note a $1,500 business expense and Mr. Peter Price claimed a $1,359 business expense in his 1996 T1 Adjustment Request. Mr. Peter Price gave no evidence about expenses himself.

Mr. Stanley Price testified that he gave Liberty Mutual's accountants some labour/material figures for the jobs, but his evidence was inconsistent as to whether he provided this information in writing or verbally. He explained that since Peter did not have receipts or invoices, he arrived at the labour/material splits set out in the accountants reports, after-the-fact, through discussions with Peter, by visiting each site to estimate the cost of materials used and by obtaining estimates from a lumber yard as to the cost of materials for particular jobs. Mr. Stanley Price testified that he did not have written quotes for any of the jobs nor did he retain the estimates from the lumber company.

The figures in the handwritten document differ from the self-employment figures in the two Flanagan reports and the two Kenneth J. Craven reports. All four accountants' reports also differ among themselves.

The August 12, 1997 Flanagan report, like the handwritten document, lists 11 homeowners but includes the homeowners names. This report contains the following figures:

Total revenues from self-employment:

$34,385.00

Total amount for labour:

$24,485.00

Less expenses:

$1,500.00

Total amount for materials:

$9,900.00

Gross annual income from self-employment and employment:

$28,642.00

Gross weekly income from self-employment and employment:

$550.81

Net weekly income from self-employment and employment:

$418.82

Weekly IRB (based on self-employment and employment income):

$335.06

Weekly IRB (based on employment income):

$83.54

Kenneth R. Craven prepared reports dated October 16, 1998 and October 21, 1998. The October 16 Craven report lists nine homeowners (excluding the two homeowners also excluded from the October 16, 1998 Flanagan report). It contains the following figures:

Total revenues from self-employment:

$30,385.00

Total amount for labour:

$22,285.00

Less expenses:

$1,500.00

Total amount for materials:

$8,100.00

Total employment income:

$5,657.00

Gross weekly income from self-employment and employment:

$508.50

Weekly IRB based on self-employment and employment income:

$310.84

The October 16, 1998 Flanagan report relies on the self-employment information in the October 16, 1998 Craven report, but indicates that the gross weekly income from self-employment and employment is $505.56, the related weekly IRB is $309.34 and the IRB based on employment income is $81.30.

The October 21, 1998 Craven report lists eight homeowners (also excluding Mr. Bragg). It contains the following figures:

Total revenues from self-employment:

$26,885.00

Total amount for labour:

$18,785.00

Less expenses:

$1,500.00

Total amount for materials:

$8,100.00

Total employment income:

$5,657.00.

Gross weekly income from self-employment and employment:

$441.19

Net weekly income from self-employment and employment:

$342.21

Weekly IRB (based on self-employment and employment income):

$273.77

When Mr. Peter Price originally filed his 1996 income tax return, he did not report his self-employment income. He filed as evidence a T1 Adjustment Request and Statement of Business Activities, dated March 9, 1998, claiming his 1996 self-employment income. He claimed gross self-employment revenues of $34,950, materials expenses of $8,100 and $1,359 for tools and telephone expenses and capital cost allowance, resulting in a claim of $25,491 in net self-employment income. Mr. Peter Price testified under cross-examination that he filed the 1996 T1 Adjustment Request to prove his income for accident benefit purposes. He also conceded that he had not refiled for any other year he had earned self-employment income.

Conclusion:

For a number of reasons, I find that Mr. Peter Price has failed to establish the quantum of his self-employment income.

Mr. Stanley Price testified that he has been employed as a stock keeper for the past 23 years and has done some construction throughout his life. However, I heard no specific evidence as to the extent of Mr. Stanley Price's experience in construction such as would establish that he has the requisite skill to make reliable after-the-fact estimates of the cost of materials used in a variety of renovation jobs. He may well have this skill, but I did not receive evidence of this.

Mr. Stanley Price testified that the figures he gave the accountants were rough estimates. However, I find these estimates to be problematic. Commission cases have established that it is not essential that an applicant establish the precise amount of his pre-accident income.³ Cases have also recognized that small businesses frequently do not maintain sophisticated accounting and financial records and have held, and I agree, that such businesses should not be held to the same standards as larger, more sophisticated companies. However, arbitration and appeal decisions have also concluded, and I agree, that applicants employed in less sophisticated, small businesses still have the burden to prove their income on a reasonable basis with reliable documentation.⁴ I find that Mr. Peter Price has not satisfactorily accomplished this.

The handwritten document seems to be the original source of information for the accountants' reports and Mr. Peter Price's 1996 T1 Adjustment Request. However, the origin and author of the handwritten document are in question. Although the notation on this document suggests that Mr. Stanley Price supplied the information, he expressed obvious confusion over the source and contents of the document. He was not certain whether he prepared this document or provided it to the accountants. This is particularly problematic because a great deal turns on the strength and reliability of Mr. Stanley Price's evidence, since he is the only witness called to testify about the labour/material splits. The amount of Mr. Peter Price's IRB ultimately depends upon his father's evidence. I find that Mr. Stanley Price displayed significant memory problems and seemed to exhibit a lack of confidence under cross-examination about the labour, material and expense figures. This causes me to wonder whether it was he who actually estimated the labour/material splits for the jobs.

Whereas the figures in the handwritten document and the accountants' reports are consistent for the total revenues received for the various jobs, the final calculations of self-employed income earned differ among these documents. I find that the differences are accounted for at least in part by the fact that in successive reports the number of renovation jobs decreases from the original 11, to nine and then to eight. However, I received no explanation as to why the revenue originally reported for the Brown and Jukes jobs was subsequently excluded from the income calculations. There might be a reasonable explanation for these jobs being excluded, but Mr. Peter Price did not provide one. I find that this, along with other evidentiary problems, weakens the reliability of the self-employment evidence.

The evidence was inconsistent regarding whether Mr. Peter Price incurred self-employment expenses (for other than materials) for items such as tools, travel and telephone expenses. Mr. Peter Price gave no evidence about this and his father denied that Peter incurred such expenses. The Flanagan and Craven reports note a $1,500 expense for these items and Mr. Peter Price claimed $1,359 in business expenses in his 1996 T1 Adjustment Request. The October 16, 1998 Flanagan report also raises a concern about inconsistencies in the expense information provided. I find that these inconsistencies further affect the reliability of the self-employment income evidence.

The methods Mr. Stanley Price employed to arrive at the costs of materials used on the various jobs also raises some concerns.

On two occasions in his testimony, when asked about obtaining estimates from the lumber yard, Mr. Stanley Price used the cost of a deck as an example, explaining that the lumber yard can provide an estimate for any size deck to within $100. However, I heard no evidence whether a lumber yard provided him estimates for more complex projects such as some of those Mr. Peter Price undertook.

In addition, it is not clear, with some of the jobs, how comprehensive an investigation Mr. Stanley Price could have done after-the-fact when preparing estimates. For instance, the Laffin job involved building a basement apartment, side and basement entrances, constructing steps, a walkway, a deck, installing a new roof and putting in a flower bed; and the Fenton job involved cutting a wall, installing a patio door, building a deck with railings and stairs and building a platform deck to be assembled around a trailer. Clearly, these jobs entailed more than simply building a deck and required more materials than lumber and nails. Mr. Stanley Price testified that he lived with Ms. Laffin at the pertinent time and saw Peter doing some of the work. However, I heard no evidence as to how frequently he was present at any of the sites when materials were being installed. Consequently, I am not satisfied as to the extent of Mr. Stanley Price's knowledge of the particular materials Peter used, in order for him to arrive at reliable estimates. This is especially a concern with jobs where many materials used cannot be observed through an after-the-fact, external inspection of the project.

Upon reviewing all of the evidence, I conclude that Mr. Peter Price has failed to meet the burden to prove the amount of self-employment income he earned in the 52 weeks before his accident. He did not present reliable evidence of this and therefore of his entitlement to a higher IRB. Accordingly, he is entitled to an IRB under section 4 of the Schedule at the rate of $81.30, as the parties agreed.

EXPENSES:

The parties made no submissions as to expenses. I encourage the parties to come to agreement on this matter. Failing this, I may be spoken to about expenses.

February 4, 2000

Beth Allen Arbitrator

Date

Neutral Citation: 2000 ONFSCDRS 28

FSCO A98-000053

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PETER PRICE

Applicant

and

LIBERTY MUTUAL INSURANCE 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. Mr. Price is entitled under section 6 of the Schedule, from October 8, 1999 onwards to an IRB of $81.30 per week with interest, calculated based on his employment income. He is entitled to no additional amount for self-employment income.

2. The parties may now address the expense.

February 4, 2000

Beth Allen Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2Mr. Davison testified that there was an error in his letter. The cost of installing the back door was actually $150 and not $350 as stated in the letter.
3. 3Mills and Canadian General Insurance Company, (OIC A-005599, July 6, 1995); varied on appeal by Appeal Decision (OIC P-005599, October 8, 1996); Agha and General Accident Assurance Company of Canada (OIC A-009703, May 31, 1995); confirmed on appeal by Appeal Decision (OIC P-009703, February 27, 1997); and Moore and Motor Vehicle Accident Claims Fund, (FSC0 A96-000362, March 12, 1999)
4. 4Mills, supra, footnote 3.```