Neutral Citation: 2001 ONFSCDRS 130

FSCO A00-000441

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

GERALD CARR

Applicant

and

LOMBARD GENERAL INSURANCE CO. OF CANADA

Insurer

REASONS FOR DECISION

Before:

Susan Sapin

Heard:

February 12, 13 and 14, 2001, in Barrie, Ontario.

Appearances:

Robert H. Littlejohn for Mr. Carr

Albert Conforzi for Lombard General Insurance Co. of Canada

Issues:

The Applicant, Gerald Carr, was injured in a motor vehicle accident on January 5, 1999. He applied for statutory accident benefits from Lombard General Insurance Co. of Canada ("Lombard"), payable under the SABS -1996.¹ Lombard refused to pay weekly income replacement benefits (IRBs) or ongoing housekeeping and home maintenance expenses. The parties were unable to resolve their disputes through mediation, and Mr. Carr applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Carr entitled to IRBs pursuant to section 4 of the SABS-1996?

2. Is Mr. Carr entitled to housekeeping and home maintenance expenses of $740 incurred for the month of May 1999, and expenses to January 5, 2001 at the rate of $15 per hour for 4-5 hours per week, pursuant to section 22 of the SABS-1996?

3. Did Mr. Carr provide sufficient information to the Insurer to enable it to determine his entitlement to an IRB, as required by section 33 of the SABS-1996?

4. Is either party liable to pay expenses of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?

Result:

1. Mr. Carr is not entitled to an IRB.

2. Mr. Carr is entitled to six hours of housekeeping every two weeks at $15 per hour from May 1999 to January 5, 2001, pursuant to section 22 of the SABS-1996.

3. Mr. Carr failed to provide sufficient information to the Insurer to enable it to determine his entitlement to an IRB, as required by section 33 of the SABS-1996. Consequently, he is disentitled to benefits pursuant to subsection 33(2).

EVIDENCE AND ANALYSIS:

Background:

Mr. Carr, who was 68 years old at the time, was following a snow plow at approximately 65-70 km per hour on a rural two-lane highway on the morning of January 5, 1999, when he was rear-ended by another vehicle and propelled off the road and across a ditch. His car came to rest in deep snow against a fence. He could not move his arms or legs. The doors of his vehicle were jammed shut. A passer-by called an ambulance. The attendants extricated Mr. Carr from the vehicle through the back window, using a spinal board, and took him to Collingwood Hospital. He was treated and discharged late that evening, once he had regained feeling in his limbs.

Mr. Carr was diagnosed with a whiplash injury to his neck and back, which injured his spinal cord and rendered symptomatic the pre-existing significant degenerative disc disease in his neck and back. Mr. Carr underwent an intensive course of physiotherapy after the accident and on May 10, 1999 was discharged to a home exercise program after reaching his maximum recovery.

Mr. Carr testified that he was unable to resume his duties as a director and corporate secretary of Bolam Funds, an investment company incorporated and based in the Bahamas, because of his accident injuries.

Entitlement to IRBs

Mr. Carr is entitled to an income replacement benefit pursuant to section 4 of the SABS-1996 if he establishes, on a balance of probabilities, that he sustained an impairment as a result of the accident; that he was employed and earned an income at the time of the accident; and that he suffers a substantial inability to perform the essential tasks of his employment as a result of the accident.

Mr. Carr maintained that, as a director and secretary of Bolam Funds, he was an employee of the company and was entitled to a $100,000 US yearly salary, of which he received a prorated portion in the amount of $1,280 US in early April 1999 for work performed for the three or four days prior to the January 5, 1999 accident.

The Insurer argues that Mr. Carr is not entitled to an IRB because, if anything, he was self-employed, and he failed to establish that he received the $1,280 payment, or any employment income at all.

Was Mr. Carr employed or self-employed?

Whether Mr. Carr is entitled to an IRB depends on the answer to this question. Self-employment income is treated differently than employment income under the SABS-1996. An employed person's benefit rate is calculated as 80 percent of his net income from employment, based on either of the four weeks prior to the accident, multiplied by 13; or 52 weeks before the accident.²As an employee, assuming Mr. Carr meets the disability test and can prove that he received the $1,280 in salary as he claims, Mr. Carr would be entitled to the maximum IRB of $400 per week. A self-employed person's benefit rate, however, is based on his income net of expenses, either in the 52 week period prior to the accident, or in the last complete fiscal year of the business.³To qualify for an IRB as a self-employed person, an insured person is required to provide the insurer with information about his business profits, income or expenses, from which the insurer then calculates an amount for an IRB. As Mr. Carr failed to provide this information, no IRB could be calculated, and the amount of his IRB as a self-employed individual would, therefore, be zero.

The SABS-1996 distinguishes between the two types of employment status because, as the purpose of an IRB is to replace lost income from employment, it is important that an insured person's income is measured fairly. Where the insured person's employment status is not straightforward, as is the case here, an interpretation of that status may be required. An insured person's characterization of his employment arrangement can be re-evaluated if it provides a distorted picture of the person's income.⁴

Section 2(5) of the SABS-1996 defines "employed" as a general term, with "self-employed" as a specific type of employment:

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

As the terms are not further distinguished, one must look to the FSCO Guideline for Identifying Self-employed Individuals,⁵ which sets out indicators of employment and self-employment, as well as previous arbitration decisions that have considered these terms.

In Raickovic and Gore Mutual Insurance Company,⁶ Arbitrator Palmer applied the grammatical and ordinary meaning of the word "employed" as found in Black's Law Dictionary,⁷ defined as "a relationship of service to another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the /material details of how the work is to be performed." She distinguished it from self-employment, defined by Webster's Third International Dictionary as "earning income directly from one's own business, trade, or profession rather than as a specified salary or wages from an employer."

In support of his assertion that he was an employee of Bolam Funds, Mr. Carr relied on the above definitions as well as the wording of the Guideline, which similarly defines an employee as "An individual who is hired to perform pre-determined tasks/work in a business in exchange for remuneration." Mr. Carr relied particularly on the statement in the Guideline that "If the individual derives his or her remuneration from an incorporated business, then he or she is considered to be an employee of the corporation."⁸

Contrary to Mr. Carr's assertion, however, the mere fact that Bolam Funds is an incorporated company is insufficient to qualify Mr. Carr as an employee, regardless of what the Guideline might say. The Insurance Act provides for the making of guidelines, and states that they "...shall be considered in any determination involving the interpretation of the Statutory Accident Benefits Schedule. "⁹ Arbitrators have held that such guidelines are not binding.¹⁰ Furthermore, with respect to this Guideline in particular, arbitrators have consistently stated that in determining whether an applicant is an employee or self-employed, it is necessary to consider the substance as well as the form of the applicant's business arrangements.¹¹ In Oliveira and Wellington Insurance Company, Arbitrator Makepeace agreed with the reasoning in the leading case, Piper and Zurich Insurance Company¹², that,

...the inquiry into the amount of an insured person's pre and post-accident income should go beyond mere form, to examine the substance of each individual's financial situation within the overall pre-accident context. The existence of a corporate structure....does not preclude further inquiry into the income of an insured person....

The Guideline lists a number of indicators of traditional self-employment situations. These include situations where the individual is an owner of an unincorporated sole proprietorship or a partner in a partnership, and makes executive decisions about the business; has an established location where business transactions take place; participates in everyday business operations (as opposed to being just an investor, for example); controls his own methods, schedule and hours or work, and may not necessarily work a set number of hours per set period (eg. 40 hours per week); negotiates the price of products or fees for services with the customer or client; and determines the annual income as his or her profit from the business for Canadian income tax purposes.

As Mr. Carr testified that Bolam Funds was incorporated under the laws of the Bahamas and that neither he nor the company reported any income or paid taxes in Canada, this last indicator of self-employment, as well as others such as ineligibility for Employment Insurance benefits, contribution of employer and employee premiums to the Canada Pension Plan and collection and remission of federal and provincial taxes, would not be useful in determining Mr. Carr's employment status.¹³

Comparing the indicators of self-employment discussed above to Mr. Carr's testimony and the documentary evidence provided, I find that he carried out his duties on behalf of Bolam Funds as a self-employed person rather than an employee, for the reasons set out below.

Mr. Carr's evidence

Mr. Carr testified that he was a very successful commodities trading advisor and commodities pool operator¹⁴ in the United States from the early 1970s. He moved to Nottawa, Ontario, in 1993, where he resides with his companion, Mrs. Connie Key, on a 60-acre rural property. Between 1993 and 1997, he concentrated on perfecting a system he had developed to track and analyse, on a daily basis, 33 different commodities including grains, energies, gold, silver and copper. Mr. Carr testified that he earned no income in those years from this activity.

Mr. Carr testified that in 1997 he was approached by George Clarke, a business acquaintance, to set up an investment company in the Bahamas, which would trade in commodities. Bolam Funds was incorporated under Bahamian law on December 5, 1997. Mr. Clarke and Mr. Carr were appointed as two of Bolam's three directors. Twenty-six shares in bearer form were created but never issued. Mr. Carr testified that with this type of share, the owner of the share is not identified, either on the share certificate or in the company registers. It is therefore not possible to tell who owns the shares, or if in fact there were any shareholders.¹⁵ It is also not possible to tell who, if anyone, would be entitled to share in the profits of the company. Mr. Carr testified that he himself had no ownership interest in Bolam Funds, maintaining that he was merely an "employee."

Mr. Carr described his duties in setting up Bolam Funds. He identified potential investors, determined mailing lists, prepared offering memoranda, discussed future products, and arranged for advertising. Once the company was launched, he ran the international advertising and personally followed up on all the leads, using his home computer and Mrs. Key's telephone line and fax machine.¹⁶ He reviewed incoming faxes and e-mails, responded to inquiries, provided documents and memoranda, arranged for mailings from the Bahamas to individuals, processed documents and opened accounts. Mr. Carr carried out these activities from his home in Nottawa, with occasional travel to Nassau. He estimated that he spent 40 hours per week on these duties.¹⁷He stated that Bolam reimbursed his expenses by way of wire transfers from Nassau, directly to Mrs. Key.

As corporate secretary for Bolam, Mr. Carr testified that he signed documents but did not prepare filings, which were done by the law firm of Ward & Co., the resident agent for the company in the Bahamas.¹⁸ Mr. Carr testified that the resident agent also took care of the "back office aspects of the business," a term he did not explain. Mr. Carr testified that he would have learned more about his duties as corporate secretary had the accident not prevented him from working.

Mr. Carr provided very little evidence about his relationship with Mr. Clarke or Mr. Clarke's role in the company, or about how, or when, he (Mr. Carr) expected to be remunerated for his work. He testified that he did not have either a verbal or written employment contract. He did not indicate that Mr. Clarke, or anyone else, directed his activities in any way. I heard no evidence that Bolam had any salaried employees.

An Employer's Confirmation of Income form completed by Mr. Clarke on May 3, 1999 indicates that Mr. Carr received a "salary" of $1,190 US for the week prior to the January 5, 1999 accident. The form describes Mr. Carr's duties as full time: "As a Director participate in decision-making for Bolam. Frequent physical presence required in Nassau. New business development. Director signature for company contracts."

I do not find this document to be reliable or to support Mr. Carr's claim that he was an employee hired in return for a specific wage. No explanation was provided for why the $1,280 amount claimed as income by Mr. Carr differed from the $1,190 indicated on the form signed by Mr. Clarke. The document provides no evidence that Mr. Carr actually received any money from Bolam. There is no information on this form to indicate that Mr. Carr performed the duties described as an employee in return for a salary at the time of the accident, as opposed to a director for whom no remuneration was specified in 1997 when Mr. Carr was engaged in setting up the company. There was no evidence of any company contracts signed by Mr. Carr. As Mr. Clarke did not testify, the content of this document cannot be verified.

Mr. Carr's testimony about the purported salary payment calls his credibility into question and renders it unlikely, in my view, that he received any such payment. Mr. Carr testified that he received the payment from Bolam in early April 1999 (approximately four months after the accident) in the form of a cheque "payable on a Swiss Security" in the amount of $1,280 US. He testified that he endorsed the cheque on the back, payable to Jan Ward, the resident agent, and mailed it back to him in the Bahamas, because he could not cash it in Canada. Mr. Carr did not explain why he could not cash the cheque in Canada. He could provide no physical or other evidence of this payment. He stated that he did not copy the cheque, and that it had arrived without any covering letter. He testified that he went to Nassau to get a copy from Mr. Ward and from "Swiss Security," without success.

Mr. Carr admitted at the hearing that he lied to the Insurer's accountant in his July 15, 1999 reply to its request for bank records or cancelled cheques to verify the payment of $1,280, when he told them that "the compensation in question was wire transferred to an account in the Bahamas," and that he did not have access to the records. He testified that he lied because Lombard's accountant was asking for records of the perennial flower business owned by Mrs. Key, to which he felt it had no right, and that he got "fed up" and decided to tell the accountant that the money had been wire transferred.

In further support of his assertion that he was a salaried employee of Bolam Funds, Mr. Carr relied on three resolutions of the Board of Directors, of which he was one of only two, and later, three directors.

The first resolution, dated December 14, 1998,¹⁹ signed by George Clarke and Gerald Carr as directors, appointed Mr. Clarke as President and Mr. Carr as Secretary of Bolam Funds.

The second resolution, dated December 15, 1998, signed by George Clarke and Gerald Carr, appointed Ward & Co., a Nassau law firm, as Administrator of Bolam Funds and Jan Ward as a director, and resolved "that annual compensation for Directors of Bolam Funds S.A. be tabled for discussion and resolution at the first board of directors meeting in February 1999."

These resolutions pre-date Mr. Carr's January 5, 1999 motor vehicle accident.

The third resolution, dated February 24, 1999 and signed by a single director, George Clarke, certifies that a "quorum was at all times present and acting," and provides:

1. that Mr. Gerald E. Carr, the Secretary Treasurer of Bolam Funds S.A. be replaced due to his incapacitation.

2. that the Board of Directors will receive, retroactive to January 1, 1999, compensation for their services in the amount of ...($100,000 U.S.) per annum to be paid quarterly in arrears.

3. that Mr Gerald E. Carr, due to his incapacitation, will receive his compensation beginning when, and if, he is capable of assuming his duties as a Director and Secretary Treasurer of Bolam Funds S.A.

I find nothing in any of these resolutions to indicate that Mr. Carr was an employee, or that Mr. Clarke was acting in the capacity of an employer when he signed them. There is nothing that characterizes the compensation as salary or wages, as opposed to a director's fee or honorarium. No document relates the compensation to specific duties. Taken at face value, paragraph #3 of the third resolution appears to suggest that Mr. Carr would not be entitled to be paid anything at all, not even for the week prior to his January 5, 1999 accident, unless and until he was able to "assume his duties."

Furthermore, I find that Mr. Carr's testimony about how Bolam Funds operated, and statements he made to the Insurer and others after the accident, make it very unlikely that he was hired as an employee of Bolam Funds in exchange for a salary in 1997, as he claims.

Mr. Carr testified that investors in Bolam Funds were required to invest $500,000 US for one year, and that by the time of the accident, total assets under management by Bolam Funds amounted to between 15 and 18 million dollars US. Seventy-five percent of each investment remained in interest-bearing accounts. The interest was not paid to investors but retained by Bolam Funds. The remaining twenty-five percent was allocated between two companies, Carr Asset Management (CAM) and McLaren Management, which used the funds to trade commodities on Bolam's behalf, in return for management fees and a percentage of the profits on trading. Mr. Carr testified that he was the sole director of CAM, and Mr. Clarke was the sole director of McLaren Management.

I did not find Mr. Carr's testimony about CAM to be credible. Despite testifying that he was the sole director of CAM and that he alone provided the financial analysis for the company and managed the funds allocated to it, Mr. Carr testified that he had no ownership interest in CAM, and that he earned no income from it. His own accountants, however, state in their report that they were advised that Mr. Carr owned CAM, that the company was to provide investment management services to Bolam for a management fee, and that such income would be considered as income from self-employment.²⁰ Although the report suggests that the services were not provided, Mr. Carr testified that he spent time on the computer prior to the accident conducting analyses, and statements he made to Lombard and to Dr. Warren Goldstein, below, clearly indicate that he also told others he was actively involved in trading commodities through CAM prior to the accident.

Mr. Carr refused to provide any information to the Insurer about CAM, despite repeated requests, claiming the information was not relevant because he chose to advance his claim for IRBs solely on the basis that he was an employee of Bolam Funds.

I find that the information is relevant, however. Operating as CAM, Mr. Carr traded commodities with the money from Bolam investors that he himself had recruited. The two companies were very similar in operation and corporate structure. Mr. Carr was a director of both companies, both companies issued bearer shares, they shared the same resident agent and corporate address, and there was no evidence that either company had any employees. I find the two entities to be so closely connected that information about CAM is necessary to the fair and accurate assessment of the substance of Mr. Carr's pre-accident financial situation required for the purpose of determining entitlement under the SABS-1996. Although it is possible, in theory, for Mr. Carr to have been simultaneously self-employed with CAM while an employee of Bolam, I find it highly unlikely based on the evidence provided. The following evidence also supports this conclusion.

In a signed statement Mr. Carr provided to the adjuster who came to his home to assist him in completing an Application for Accident Benefits on January 15, 1999, ten days after the accident, Mr. Carr stated that he was self-employed with Mrs. Key, his companion, in a perennial flower business and that he was a director of two companies, CAM and Bolam Funds. He stated "I have a partner in New York with McLaren Management, and we operate Bolam Funds SA, which is a mutual company. I do not have an income from these ventures at this point as we are putting the money back into the business to build equity. [emphasis added]"²¹ The statement goes on to describe his activities as trading commodities for CAM and administrative and international sales work for Bolam.

Mr. Carr also told Dr. Warren C. Goldstein, a neurologist who examined him, that he was self-employed. At page 6 of his December 28, 2000 report of report, Dr. Goldstein wrote:

At the time of the accident, he was a financial and securities advisor. He owned his own company that was based out of Nassau. He also consulted to another company there.

He described that his work involved the bulk of his waking hours since he had international clients and the markets were opened around the world for prolonged work hours

He told me that he felt very responsible to his clients and realized that he could not "stay on top of things" on...a part-time basis. For this reason, he transferred most of his work on to the son of his partner.

I heard no evidence to persuade me that the information in either of these two documents was inaccurate or untrue.

In light of this evidence, I find the resolutions of the Board of Directors of Bolam Funds to reflect nothing more than that a single director, Mr. Clarke, decided to compensate himself and Mr. Ward with the company's retained earnings for their services as directors. As noted above, due to the secretive bearer share device employed by Bolam Funds, there is no evidence that anyone else, i.e. shareholders, was entitled to share in the company profits. Given Mr. Carr's evidence of the sums of money under management by Bolam and how the investments were managed, as well as his statement to the Insurer that "money was put back into the business," I find it evident that both companies earned revenue. I find that the corporate structure of Bolam Funds, and the resolutions of the Board of Directors, particularly the third and last one, signed unilaterally by Mr. Clarke, were merely vehicles to transfer the company profits to the directors, of which Mr. Carr was one. Profit-sharing is a clear indicator of self-employment, and there is no evidence to substantiate Mr. Carr's claim that the directors' "compensation" constituted a salary payment to him, as opposed to a share in the company profits.

I find that Mr. Carr's earlier statements, in which he presented himself to others as self-employed and referred to Mr. Clarke as his partner in the operation of Bolam Funds rather than an "employer," more accurately describe his pre-accident business situation than his testimony at the hearing that he considered himself to be an employee. At the hearing, Mr. Carr explained that he incorrectly or loosely used the terms "self-employed" and "partner" because he did not have sufficient "legal" knowledge to distinguish between employment and self-employment, and that he had been misled by the Insurer about the meaning of these terms. Given Mr. Carr's obvious intelligence, the sophisticated business in which he was engaged, the many inconsistencies in his evidence and his demonstrated tendency to tailor information that he provided to the Insurer,²²I did not find this explanation to be believable.

Mr. Carr tendered no other independent, reliable or objectively verifiable documentary or other evidence, either to the Insurer at any time, or at the hearing, that would support his claim that he was an employee of Bolam Funds, or that he was hired to provide services in exchange for a specific wage or salary, rather than a share in profits. He testified that he could not provide income tax returns because, although he is a resident of Canada, he received no income and was therefore not required to file.²³ He stated that he could not provide bank records because he has no bank accounts in Canada.

I find that Mr. Carr clearly does not meet either the definition of an "employee", as defined by Arbitrator Palmer in Raickovic,²⁴ as someone in "a relationship of service to another under any contract of hire... where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed," nor the similarly-worded definition in the Guideline.

For these reasons, I find that Mr. Carr has not established, on a balance of probabilities, that he was an employee for the purpose of eligibility for an IRB under the SABS-1996.

Rather, I find that Mr. Carr was self-employed based on the indicators of traditional self-employment situations as set out in the Guideline²⁵ and the evidence as a whole. It was evident that Mr. Carr worked completely independently on Bolam business from his own home at the time of the accident, in exchange for nothing more than reimbursement of expenses, infrequent trips to Nassau and the expectation that he, and the other directors, none of whom were employees, would be remunerated at some point in the future, for an undetermined amount, when the venture became profitable. As it is clear from the evidence that Mr. Carr engaged in duties for Bolam, traded assets on international markets that were "open all hours," assisted Mrs. Key with her business, did housework and maintained the 60-acre property, I find that Mr. Carr set his own hours, schedules and methods of operation while juggling many responsibilities.

In support of his argument that he should be considered to be a salaried employee of Bolam Funds, Mr. Carr relied on the decision of Arbitrator Mackintosh in Piper, referred to above. In that case, the applicant was the president and controlling shareholder of an electrical contracting business incorporated in 1953 who carried on his trade as an electrician through the company for over forty years.

Arbitrator Mackintosh found that the applicant was an employee of the corporation in fact as well as in form, rather than self-employed. Her decision was based mainly on her finding that the applicant had established a consistent and long-standing practice of drawing a regular weekly salary (for which the company issued a T4 statement) — certainly not the case here. On appeal, the Arbitrator's approach was approved by the Director of Arbitrations, who nevertheless emphasized that the specific facts were "compelling and possibly unique."²⁶

Given the facts presented by Mr. Carr, which are very different from those in Piper, and the lack of information about Bolam's or CAM's business income or expenses, I find the decision in Piper to be of no assistance to Mr. Carr's position.

Furthermore, arbitrators have declined to follow Piper. In Rocca and GAN Insurance Company (OIC A95-000106, May 29, 1996) for example, the applicant claimed that he was an employee of his incorporated family business, of which he was the president, secretary-treasurer and only director, and for which he held the sole voting share. He claimed an IRB on the basis that he earned a weekly salary starting five weeks before his motor vehicle accident. Arbitrator Evans distinguished the facts in Piper and found Mr. Rocca to be self-employed, on the basis that he had established no consistent pattern of salary-based payments and that, at best, whatever decisions had been made regarding salary payments were made to reduce taxes and could not meaningfully affect Mr. Rocca's employment status. Arbitrator Evans' decision was upheld on appeal on this particular point.²⁷ I find the same principles apply in this case. I have no reason to depart from my conclusion that Mr. Carr was self-employed.

Essential tasks of employment

I find Mr. Carr's essential tasks as a self-employed person to include both his activities on behalf of Bolam Funds as well as CAM. With respect to CAM, I accept Mr. Carr's evidence that he spent up to eight hours a day conducting analyses on his computer. I find this essential task to require prolonged sitting, keyboarding, and mental concentration and alertness.

With respect to Mr. Carr's business development and advertising activities for Bolam Funds, I find his essential tasks to include using the word processing function of his home computer to type and prepare documents and correspondence, and communicating with Bolam and international clients by mail, telephone, fax and e-mail. These tasks require keyboarding skills, handling of documents, organization and prolonged mental concentration and alertness.

I find Mr. Carr's duties as corporate secretary for Bolam Funds to have been minimal, if any, as it was clear that this function was handled by the resident agent.

Substantial inability

The medical evidence supports Mr. Carr's testimony that he was a person of considerable physical and mental energy prior to the accident and that he sustained significant impairments in the accident which constituted a serious setback to him.

X-rays taken at the time of the accident and an MRI taken six months later reveal that Mr. Carr suffered extensive pre-existing multilevel degenerative disk disease in both the cervical and lumbar spine. There was no evidence that these injuries were symptomatic prior to the accident.

The reports of Dr. George Ray, physiatrist, Dr. M. Cusimano and Dr. R.J. Moulton, neurosurgeons, and Dr. Warren Goldstein, neurologist, are consistent in their opinions that Mr. Carr suffered cervical spinal cord damage in the accident that explained his symptoms of numbness and lack of digital control and spasticity in his left hand and significant neck range restriction, pain and stiffness. The medical evidence supports Mr. Carr's testimony that prolonged sitting causes pain, stiffness or cramping in his neck, shoulders and hands and that his pain, discomfort and impairments prevent him from using a keyboard efficiently and interfere with prolonged mental concentration and alertness. Mr. Carr testified that he takes painkillers in the form of Tylenol and Celebrex daily, and that he has recently increased the dose of Celebrex on his doctor's advice due to his symptoms.

Dr. Goldstein felt that Mr. Carr's combination of symptoms rendered him significantly disabled from resuming his position as a financial and securities advisor, and that his prognosis for further recovery two years after the accident was poor. Dr. A. Singh, Mr. Carr's family doctor, felt that Mr. Carr's spinal injuries made it "difficult, if not impossible, to use a computer for the necessary purposes of his occupation as a financial analyst nor assume the demanding executive duties he had before his accident..."²⁸

A Functional Abilities Evaluation (FAE) conducted in January 2001 concluded that Mr. Carr was not able to perform his pre-accident occupation of Commodity Trading Advisor as described by Mr. Carr and by the Dictionary of Occupational Titles. As the report did not include Mr. Carr's description of these duties nor that contained in the Dictionary, I was not able to judge whether the report's conclusion was well-founded. (This was a weak point in the reports of Dr. Singh and Dr. Goldstein as well.)

Despite this, however, I find, based on the objective medical evidence, that it is more likely than not that Mr. Carr's accident-related impairments have caused him to fall behind in his profession and to be substantially unable to perform the essential tasks of his pre-accident employment as both a commodities trader and director of Bolam Funds.

Amount of IRB

Having found that Mr. Carr is a self-employed person and is entitled to an IRB on the basis that he meets the substantial inability test, the next step would be to determine the amount of IRB for which Mr. Carr would qualify. This, however, was not possible, because Mr. Carr provided no evidence about the income or expenses of either Bolam Funds or CAM that would enable a calculation of an IRB to be made as required by the SABS-1996. The amount of IRB, therefore, is zero.

In the event that I have erred in finding that Mr. Carr was not an employee of Bolam Funds, I find that he would not be entitled to an IRB as an employee because he failed to establish that he was entitled to receive, or that he did receive, a "salary" payment of $1,280 US from Bolam, for the reasons set out above.

Housekeeping and home maintenance

Mr. Carr testified that, since the accident, he is unable to continue the upkeep and maintenance of the house and 60-acre property in Nottawa, Ontario, where he resides with his companion, Mrs. Connie Key, due to pain and restricted mobility. He testified that prior to the accident, he shared the housekeeping with Mrs. Key, performing the heavier chores such as washing windows, mopping the floors and cleaning the bathrooms. He stated that he was also responsible for maintenance around the property, and that he cut trees, chopped wood, maintained the outdoor pool, did the gardening, built rock walls and maintained the lawn. In winter, he ploughed the driveway himself with a front-end loader.

Mr. Carr testified that after the accident, he arranged for Chalet Valet, a company that specializes in "Personalized country home management," to provide 4-5 hours of housekeeping and home maintenance once a week, at $15 per hour. Lombard paid for this service until April 30, 1999. The April 30, 1999 invoice indicates that 32 hours of yard cleanup, grass cutting and trimming in that month was charged at $20 per hour.

Based on the medical evidence provided, I find that Mr. Carr was not able to engage in the heavier aspects of housekeeping and property maintenance to the extent he was before, and that assistance of 2-3 hours per week, or six hours every two weeks, for the heavier chores was reasonable and necessary as a result of the accident, up to the limit of 104 weeks after the accident as provided by subsection 22(3) of the SABS-1996. I further find full assistance with snow removal in the winter time to be necessary.

Surveillance evidence

The Insurer presented a videotape and report made by a private investigator in May 1999 as evidence that Mr. Carr's activity level at that time was inconsistent with his symptoms as reported by him and as described in the medical evidence.

I am excluding this evidence, regardless of its content, because of the deceptive and invasive manner in which it was obtained. In my view, to admit this evidence would be to bring the process of adjudication at this tribunal into disrepute. I exclude it pursuant to my authority under sections 23 and 25.0.1 of the Statutory Powers Procedure Act²⁹ to make such rulings as necessary to control and prevent abuse of proceedings before this tribunal and under Rule 39.2 of the Dispute Resolution Practice Code - Fourth Edition (May 31, 2001), which permits me to determine the admissibility of evidence.

The private investigator conducted the surveillance on Mr. Carr's property in the company of a female companion and a small child, and took photographs inside the home after being admitted by Mrs. Key so that the child could use the washroom.³⁰ Insurers should not be permitted to present this tribunal with surveillance evidence that relies on such unscrupulous and invasive tactics.

In any event, even if I had admitted it, nothing on this videotape would change my conclusion that Mr. Carr is substantially unable to perform the essential tasks of his predominantly sedentary and intellectually demanding pre-accident employment, or that he did not at that time require some assistance with the heavier aspects of home and property maintenance. The tape shows Mr. Carr puttering about the yard. I note that he moves as if his upper back were stiff, he supports himself on a stair railing while bending, and he rises from kneeling with obvious difficulty. Although there were many problems with Mr. Carr's credibility throughout the hearing, the surveillance evidence is not one of them.

Did Mr. Carr fail to comply with section 33 of the SABS-1996

Section 33 of the Schedule imposes a positive obligation on an applicant to provide any information reasonably required by the insurer to assist it in determining his entitlement to accident benefits within 14 days of a request from the insurer. Subsection 33(2) specifies that a benefit is not payable for any period before the person complies with subsection 33(1). For the reasons set out below, I find that Mr. Carr failed to meet the obligation imposed by section 33 of the Schedule because he failed to provide sufficient objective, reliable information to Lombard on which it could make a determination about his entitlement to an IRB. I further find Mr. Carr's contention, that Lombard failed to properly advise him about his employment status or his entitlement to benefits, to be unfounded.

On February 9, 1999, based on the information that Mr. Carr had provided in his January 15, 1999 statement (that he earned no income) and on his Application for Accident Benefits, Lombard informed Mr. Carr that he was not eligible for an IRB and asked him to complete and return an Election of IRB, Non-Earner or Caregiver Benefit Form.

I find that Mr. Carr contacted Lombard a month later, in early April 1999, to report that he had received income from Bolam Funds in the amount of $1,280. Lombard wrote back on April 21, advising Mr. Carr that "based on the fact that you are a director of this company, we may require the assistance of an accountant to calculate any benefit due to you. This will be determined once all forms have been submitted."

On May 7 and June 2, Brenda Fung, an Accident Benefits Specialist with Lombard, wrote detailed letters to Mr. Carr clearly setting out the information the Insurer required in order to calculate an IRB based on self-employment and requesting financial documentation to support his claim that he earned income prior to the accident and that he lost income as a result of the accident.

Lombard then hired the accounting firm of PriceWaterhouseCoopers (PWC), who wrote to Mr. Carr on June 11, 1999 requesting detailed information (income tax returns, financial statements, bank records, evidence of sales, job duties etc.) based on Mr. Carr's January 15 statement to Lombard about his employment with Bolam Funds, CAM and Mrs. Key's perennial flower business. I find this request to be reasonable and in accordance with the requirements of the SABS-1996. The fact that Mr. Carr chose to conduct his business affairs through companies incorporated outside of Canada does not excuse him from these requirements.

Mr. Carr responded on June 26, stating that his claim was based solely on his Bolam "salary," and that he would not provide any information about CAM. Based on this response and on the information Mr. Carr provided to Lombard, PWC concluded that Mr. Carr was self-employed as both an owner and operator of both Bolam and CAM, and, as such, it required information regarding Bolam's and CAM's income prior to and subsequent to the accident in order to be able to calculate an IRB based on self-employment income, as required by the SABS-1996.³¹ PWC also stated that Mr. Carr had not provided any verifiable information regarding income that would enable it to prepare a preliminary calculation of the IRB entitlement. I find this to be a reasonable conclusion in the circumstances, and find that it was reasonable for PWC to refuse to accept the documents Mr. Carr provided at face value.

As Mr. Carr did not present any information to Lombard or to its accountant to refute their conclusions up to and including the arbitration hearing, I find that Mr. Carr did not satisfy the requirements of section 33 and accordingly he is disentitled to an IRB for this reason.

EXPENSES:

Although Mr. Carr was not successful in his claim for an IRB, his employment status was not straightforward and he was entitled to have his entitlement to an IRB determined by an arbitrator. In the absence of an Offer to Settle in accordance with Rules 76 and 77 of the Dispute Resolution Practice Code - Fourth Edition (May 31, 2001), I would find that Mr. Carr is entitled to his expenses of the arbitration in accordance with the criteria set out in Rule 75.2. Pursuant to Rules 75 to 79 of the Code, the parties may contact the Commission if they are unable to agree on the amount of expenses to be paid.

September 11, 2001

Susan Sapin Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 130

FSCO A00-000441

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

GERALD CARR

Applicant

and

LOMBARD GENERAL INSURANCE CO. OF CANADA

Insurer

ARBITRATION ORDER

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

1. Lombard shall pay to Mr. Carr housekeeping expenses as awarded, with interest.

2. Lombard shall pay Mr. Carr his expenses of the arbitration.

September 11, 2001

Susan Sapin 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. 2section 8 of the SABS-1996
3. 3Section 62(1) of the SABS-1996 provides that an income from self-employment "shall be determined in the same manner as the person's profit from the business in which the person was self-employed would be determined under the Income Tax Act (Canada) and the Income Tax Act (Ontario)..."
4. 4Malik and Allstate Insurance Company of Canada (FSCO P00-00007, July 17, 2000)
5. 5Commissioner's Guideline 4/96, issued pursuant to section 268.3 of the Insurance Act. The Guideline applies to all accidents occurring on or after January 1, 1994, including accidents on or after November 1, 1996
6. 6(OIC A-002533, May 26, 1993)
7. 76th Edition
8. 8As opposed to self-employed
9. 9Section 268.3(2)
10. 10Oliveira and Wellington Insurance Company (OIC A96-000010, April 7, 1997)
11. 11Oliveira (supra)
12. 12(December 6, 1993), OIC A-002585 (confirmed on appeal - May 1, 1996) [footnote in original]
13. 13I find it self-evident that an insured person who wishes to claim an IRB on the basis of self-employment from a company incorporated outside of Canada and operating outside of its tax laws is not excused from complying with the SABS-1996 and must nevertheless provide the information required by ss. 62(1) to calculate an IRB.
14. 14An undated document titled "Evidence regarding what Mr. Carr did as director of Bolam Funds" prepared by Mr. Carr describes a commodities trading advisor as "a person who, for compensation or profit, directly or indirectly advises others as to the value of or the advisability of buying or selling futures contracts or commodity options..." and a commodity pool operator as "an individual or organization which operates or solicits funds for a commodity pool, that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options... "
15. 15A letter dated December 28, 2000 from Mr. Clarke to Mr. Carr states in part: "Under Bahamian law shares in Bolam Funds S.A. were issued in bearer form. Consequently, there is no list of shareholders available. Furthermore, if a shareholder list was available, which it is not, I could not divulge or produce this information for you under Bahamian law." Exhibit 1, Volume 2, Tab 16
16. 16Mr. Carr submitted evidence of some of these activities in the form of invoices from Bell Canada and London Telecom Network for services between December 20, 1997 and January 20, 1999. (Exhibit 1, Volume 2, Tab 7) He testified that these records of 885 phone calls all around the world reflect only a portion of the actual activity and that he was "precluded from discussing certain areas."
17. 17In a letter dated June 26, 1999 to PriceWaterhouseCoopers (PWC), the accountant retained by Lombard to assist in assessing Mr. Carr's claim for IRBs estimated Mr. Carr's work for Bolam to be 40 hours per week.
18. 18Jan Ward was appointed Bolam's third director.
19. 19Exhibit 1, Volume 2 of Applicant's arbitration brief
20. 20This report, prepared by Colangelo Cookson Walker, January 5, 2001, was presented for the first time on the first day of the hearing. I admitted the report over the objections of Lombard's counsel, due to the paucity and lack of clarity of evidence about Mr. Carr's business arrangements. As the report was based on the same limited and unverifiable source information I found to be unreliable at the hearing, it was not helpful to Mr. Carr's case.
21. 21Exhibit 2, Volume 1, Tab D2
22. 22A further example: Mr. Carr claimed transportation expenses for a driver to drive him to medical appointments, on the basis that he did not own a car. When the Insurer refused to pay benefits on that basis and confronted Mr. Carr with the fact that his name appeared on the ownership of a vehicle, he explained that his companion Mrs. Key had bought and paid for the vehicle and that he had merely agreed to have his name added to the ownership for the sake of "convenience," and that he did not consider himself an owner. (Exhibit 1, Volume 2, Tabs 8 and 10).
23. 23An Affidavit sworn by Mr. Carr on December 26, 2000 states that he is a resident of Canada and that he has resided in Canada for more than six months of each year. His counsel argued that Mr. Carr did not claim the $1,280US he claimed he received as income for income tax purposes for the 2001 tax year, because the amount was too small for him to be required to do so.
24. 24(OIC A-002533, May 26, 1993). Arbitrator Palmer adopted the definition contained in Black's Law Dictionary, 6th Edition.
25. 25See p. 7, above.
26. 26See also Moxon and State Farm Insurance (OIC A-000090, July 18, 1991); Meandro and Pilot Insurance Company (OIC A-004433, June 7, 1994); Rocca and GAN Insurance Company (OIC A95-000106, May 29, 1996); Croke and Wawanesa Insurance Company (OIC A-003632, August 11, 1994) confirmed on appeal (P-003632, October 11, 1996).
27. 27(Confirmed on appeal OIC P96-00055, July 25, 1997)
28. 28Report dated November 17, 2000
29. 29R.S.O. 1990, c. S-22
30. 30described by the investigator as "proceeding] to the claimant's residence under pretext..."
31. 31Letter dated August 13, 1999