Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 177

FSCO A99-001201

BETWEEN:

MARY K. SHADD

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Fred Sampliner

Heard:

May 14, 15, 16, 17 and 18, 2001, in Chatham, Ontario.

Additional written submissions were filed on May 29 and June 5, 2001.

Appearances:

James E. S. Allin for Mrs. Shadd

Jim Tomlinson for Liberty Mutual Insurance Company

Issues:

The Applicant, Mary K. Shadd, was injured in a motor vehicle accident on January 15, 1994. As a result of her injuries, she received weekly income replacement benefits from Liberty Mutual Insurance Company ("Liberty") under the Schedule.¹

In 1999, Mrs. Shadd's income replacement benefits were converted to a loss of earning capacity benefit (LEC) under the provisions of the Schedule. The parties disagreed about the amount of this benefit, her claims for the expenses of a shop assistant and her housekeeping expenses. The parties were unable to resolve these disputes through mediation, and Mrs. Shadd 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. What is Mrs. Shadd's pre-accident earning capacity?

2. What is Mrs. Shadd's residual earning capacity?

3. What amount is Mrs. Shadd entitled to for her shop assistant?

4. What is Mrs. Shadd entitled to for housekeeping expenses?

5. Did Liberty agree to pay Mrs. Shadd's ongoing housekeeping and shop assistant expenses in April 1998?

6. Is Mrs. Shadd entitled to a special award?

Result:

1. Mrs. Shadd's pre-accident earning capacity is $334.25 per week

2. Mrs. Shadd has no residual earning capacity.

3. Mrs. Shadd is not entitled to reimbursement for a shop assistant.

4. Mrs. Shadd is entitled to $1,026 for housekeeping expenses, less payments by Liberty, plus interest under the Schedule.

5. Liberty did not agree to continue to fund Mrs. Shadd's ongoing entitlement to housekeeping and shop assistant expenses in the April 1998 settlement.

6. Mrs. Shadd is not entitled to a special award.

EVIDENCE AND ANALYSIS:

The car Mrs. Shadd drove on January 15, 1994 was struck head-on by a truck and demolished on the streets of downtown Chatham. It is not disputed that as a result of the accident, Mrs. Shadd suffers cognitive difficulties resulting from her head injury and some residual soft tissue pain in her neck, shoulder and right arm. The degree of her disability is disputed.

The Schedule provides that Mrs. Shadd's long-term disability benefit, termed an LEC², is 90 percent of the difference between her pre-accident earning capacity (PEC) and her residual earning capacity (REC).³ The disagreement concerns both amounts.⁴

Pre-Accident Earning Capacity:

A self-employed person's pre-accident earning capacity is based on his or her net pre-accident annual income or that potential income which the person could reasonably have earned considering his or her personal and vocational characteristics at the time of the accident.⁵ Mrs. Shadd was a self-employed hairstylist at the time of the accident. She claims her gross earnings exceeded $1,000 per week during the year before the accident.

Mrs. Shadd was employed as a hairdresser for two years after leaving school and was self-employed during the year before the accident. Mrs. Shadd testified that her hairstyling business was very successful. She worked long hours, seeing between four and ten clients per day. Mrs. Shadd stated that she earned approximately $55-$56,000 gross annual income in 1993, including tips.

Mrs. Shadd's 1993 income tax return contrasts with her oral evidence. Her reported gross annual earnings were just under $17,000 and her net income was approximately $8,000. Mrs. Shadd filed tax returns for 1991 and 1992 which show her employment earnings were $10,828 and $9,342 respectively. Mrs. Shadd's reported net earnings show consistency during the three years preceding the accident.

Although Mrs. Shadd is not precluded from using unreported income as a basis for her pre-accident earning capacity, she must furnish reliable independent evidence to establish these earnings.⁶ Mrs. Shadd did not provide accounting records to support her oral evidence that she earned approximately three times her reported income. No documentary evidence supports her claim that she earned a substantially higher income than reported to Revenue Canada.

Mrs. Shadd also tendered the report of a rehabilitation expert in support of her claim that she either earned $50,000 a year or had the reasonable potential to do so. Mr. Robert Lychenko estimated Mrs. Shadd's income using an assumed hourly rate and expense ratio. However, he is not a qualified forensic or accounting expert, and did not review her business records to provide a reliable foundation for his estimate of her pre-accident earnings or potential income. I reject Mr. Lychenko's opinion.

I find that Mrs. Shadd has failed to establish that she earned or had the reasonable potential to earn $50-$56,000 during the year before the accident.

Ms. Kathy Haggith, the salon owner where Mrs. Shadd rented a chair during the year before the accident, testified that Mrs. Shadd was hard-working, reliable and developed a loyal clientele in the black community prior to the accident. She did not know either Mrs. Shadd's or other hairstylists' earnings.

Ms. Haggith confirmed Mrs. Shadd's evidence that customers generally tip the stylist 10% in cash, and that the stylist customarily does not declare these cash tips to Revenue Canada. I accept that Mrs. Shadd's 1993 gross annual income is understated by 10% as a result of unreported tips.⁷

Mrs. Shadd's evidence supports her claim that she developed significant skills and experience by the time of the accident. She began her hairdressing career after graduating from salon school in 1991 and passing the provincial qualifying examinations. Ms. Shadd testified that after graduating, she used census statistics for the local population in order to decide if she would specialize in black hair care for the Chatham area. As a result of her research, Mrs. Shadd sought to serve and further develop this market.

Ms. Haggith's evidence supports Mrs. Shadd's testimony, that she developed a loyal clientele in 1992 and 1993 as one of only two hairstylists serving the black population of the Chatham region. Ms. Haggith also confirmed that Mrs. Shadd was competent with performing the time-consuming complicated procedures in black hairstyling at the time of the accident, and could earn higher hourly fees as a result.

I accept the above evidence. I find that Mrs. Shadd possessed special hairstyling skills and knowledge by which she could reasonably have earned greater income at the time of the accident than shown by her tax returns.⁸

The parties relied on statistics from Revenue Canada to support their arguments concerning the amount of Mrs. Shadd's potential pre-accident income. Mrs. Shadd's accounting expert, Mr. Ian Wollach, testified that it is reliable to use $26,859, the national average net earnings for full-time hairdressers.⁹ Mrs. Shadd never earned anywhere near that amount during her three years as a full-time hairdresser before the accident, and I therefore reject that figure.

Liberty's accounting expert, Ms. Debra Chiasson, testified that $15,801¹⁰ net income for full-time hairstylists in Windsor, Ontario is more accurate. She held that it is unlikely Mrs. Shadd would potentially be able to earn more money than the average for her specific geographic area given that her declared net earnings at the time of the accident were far less than this amount. Ms. Chiasson's number is more consistent with Mrs. Shadd's reported earnings, and I accept it.

Liberty calculated Mrs. Shadd's PEC as $153.28 per week.¹¹ Rather, I find that Mrs. Shadd's PEC should be based on an annual income of $15,801 per annum plus $1,580 for tips. Dividing the total $17,381 by 52 weeks, I find that Mrs. Shadd's PEC is $334.25 under Part VI of the Schedule.¹²

Residual Earning Capacity:

In November 1998, Mrs. Shadd underwent a set of comprehensive examinations at a designated assessment centre (DAC), where the experts concluded that she could work up to 20 hours a week as a hairstylist. The evidence is that Mrs. Shadd's disability is primarily psychological.

Liberty relies on the DAC opinion of February 1999, stating that Mrs. Shadd is capable of working 50 percent of her pre-accident hours as a hairstylist. Mrs. Shadd argues that she has no residual earning capacity.

The parties agree that hairstyling is the only relevant job to the determination of Mrs. Shadd's REC. The following criteria apply in determining Mrs. Shadd's REC:¹³

a) is the person able and qualified to perform the essential tasks of the employment?

b) is there available treatment or rehabilitation to enable the person to do the tasks?

c) is the employment geographically accessible?

d) is it reasonable to expect the person to do this employment having regard to the possibility of the person's deterioration?

Liberty contends that the DAC opinion is supported by the undisputed evidence that Mrs. Shadd continued to work after the accident and opened her own salon. Mrs. Shadd argues that she could only continue hairstyling as long as she had a shop assistant to help her, and that the salon was not a profitable enterprise.

Mrs. Shadd testified she returned to work a couple days after the accident, experiencing headaches, depression, left arm/shoulder pain and sleep loss. She rented the chair at Ms. Haggith's salon, just as before the accident, but continued with her plan to open her own establishment.

In July 1995, seven months after the accident, Mrs. Shadd opened her own salon, employing another stylist, Jennifer Tatsu. The business records demonstrate that the salon was not very profitable from its opening until the time she closed it in early 2001.

Mrs. Shadd testified that she worked only 10 to 15 hours a week at her salon because of her physical fatigue and psychological symptoms. She gave examples of her cognitive difficulties: forgetting client names, events, client appointments and client hair needs, their instructions and ordering products.

Mrs. Shadd testified Ms. Tatsu often took over styling when she was tired or confused, and that she took approximately six months off work due to her cognitive problems and depression. She could not accurately recall the year. Mrs. Shadd demonstrated numerous other memory and concentration difficulties throughout her evidence.

Mrs. Shadd's evidence that her psychological and cognitive problems did not improve is supported by Dr. Andrea Lazosky, a clinical neuro-psychologist engaged by Liberty. She concluded in 1996 that Mrs. Shadd's symptoms were consistent with her having sustained a brain injury from the accident. Dr. Emilie Newell, a physiatrist, also came to a similar conclusion after testing Mrs. Shadd the next year.

On Dr. Newell's recommendation, Mrs. Shadd's family physician referred her to St. Joseph's Hospital for an assessment of her cognitive deficits in 1997. Ms. Nancy Snobelen, a speech language pathologist, confirmed Mrs. Shadd's brain injury in the following summary:

Mary presents with mild-moderate but immediate problems of sequencing, organization, planning, problem solving, reasoning and memory. Initial testing by this clinician was cursory only. She reported that it had taken her 3 years to recognize that she was having problems. It was necessary to terminate her employment and to seek medical attention for her headaches and related problems; and to seek assistance with cognitive re-training. She had employed the use of a day planner but had not been successful.

Finally, the DAC report concurs with the above experts in finding that Mrs. Shadd sustained a brain injury from the accident.

The report of Dr. Adrian Upton, a neurologist who examined Mrs. Shadd for Liberty in June 1997, contrasts with these four opinions. Dr. Upton stated that Mrs. Shadd's problems are exaggerated emotional responses to her physical injuries.

Dr. Upton interviewed Mrs. Shadd and reviewed other health experts' reports, but he did not conduct extensive cognitive testing. Consequently, I give his opinion little weight.¹⁴

Based on the opinions of the DAC, Dr. Newell, Dr. Lazosky and Nancy Snobelen, I find that Mrs. Shadd sustained a mild to moderate brain injury in the accident. I find that Mrs. Shadd's decreased memory, concentration and overall mental efficiency are a result of her brain injury.

The four experts who signed the 1998 DAC report concluded that Mrs. Shadd is capable of working a maximum of 20 hours per week as a hairstylist. The evidence is undisputed that Mrs. Shadd worked as a stylist for 10 to 15 hours in 1998. Liberty's position is that Mrs. Shadd's REC cannot be zero when she worked as a stylist after the accident and operated her own business.

Mrs. Shadd's business records indicate that she initially worked longer hours. Her 1995 income and expense summary breaks down the salon service revenues between herself and her assistant, Ms. Tatsu. This document indicates she earned three-quarters of the revenue that year. Her 1995 tax return is consistent with the summary because she incurred $1,744 in labour expenses on revenue of almost $22,000.

Mrs. Shadd's 1996 accounting evidence indicates that she reduced her workload. She paid Ms. Tatsu $7,770 on revenues of approximately $32,000, a one-third revenue rise compared to the four-fold salary increase from the previous year.

The evidence is that Mrs. Shadd did not work for six months in 1997 due to her cognitive difficulties. In that year, the salon posted gross revenues of only $6,600 and she paid her employee just over $1,100 in wages.

Mrs. Shadd's financial reports during the year that the DAC was conducted until her business closed indicate that she worked significantly reduced her hours. In 1998 and 1999, Mrs. Shadd had salary expenses of $10,500 and $15,000 respectively, which represents approximately 40% of the respective gross revenues of $24,000 and $38,000 for those years. In the last full accounting year (2000) that Mrs. Shadd operated the salon, she had revenues of approximately $32,000, and paid over half of that in wages to Ms. Tatsu.

This financial information is consistent with Mrs. Shadd's evidence that she worked part-time from 1998 onwards. Based on the financial information, I find that Ms. Tatsu performed the majority of the hairstyling work in 1998.

The 1998 on-site job analysis is further confirmation that Mrs. Shadd was working 10 to 15 hours during 1998 and 1999. Liberty hired Ms. Deborah Kemp, an occupational therapist from Reliability, to conduct a home assessment and job analysis. Mrs. Shadd told her that she worked 10 to 15 hours a week at her salon and three to five hours in bookkeeping at home.

The 1998 report of Dr. Emilie Newell, physiatrist, also supports the evidence that Mrs. Shadd worked 10 to 15 hours at the salon in that year. She reported that Mrs. Shadd told her she worked approximately 15 hours a week with Ms. Tatsu's help.

There is no evidence contradicting Mrs. Shadd's testimony that she worked from 1998 onwards with the help of Ms. Tatsu. Ms. Kemp's 1998 report to Liberty states that Mrs. Shadd continued to experience neck, shoulder and upper back discomfort, delegating her duties to Ms. Tatsu after 20 minutes of hairstyling. I find that during 1998 and 1999 Mrs. Shadd worked 10 to15 hours conducting hairstyling at her salon with the ongoing assistance of Ms. Tatsu

Ms. Kemp's report only addresses Mrs. Shadd's physical condition. However, cognitive deficiencies are Mrs. Shadd's main problems, and I therefore cannot accept Ms. Kemp's opinion that she was capable of gradually increasing her hours to full time in 1998.

The surveillance does not address Mrs. Shadd's cognitive difficulties. The videotape shows Mrs. Shadd in the salon, but the pictures are not clear. I cannot determine what she is doing or the period of time she conducts work duties. The videotape of Mrs. Shadd walking, driving and running errands has little probative value with respect to her psychological condition.

Mrs. Shadd gave evidence that she made considerable progress towards resolving her psychological problems by 1998, when she resumed work. She testified that her headaches and depression were not as severe. Her migraine headaches occurred once or twice a month, and she did not require Prozac to alleviate depression after January 1998.

Dr. Kate Partridge, the DAC's clinical psychologist, testified for Liberty to support its position that Mrs. Shadd was capable of working half-time as a stylist by 1998. Dr. Partridge's diagnosis agrees with earlier psychological opinions that Mrs. Shadd suffers mild depression in addition to her verbal, memory and concentration impairments. I accept her characterization of Mrs. Shadd as a motivated person who attempts to overcome her problems.

Dr. Partridge qualified the DAC report that Mrs. Shadd was capable of working up to 20 hours per week. She was not sure that Mrs. Shadd could maintain her styling duties without an assistant considering the distractions of a noisy and busy salon. Dr. Partridge was not surprised to learn that Mrs. Shadd closed the salon in 2001 when Jennifer Tatsu left, and felt the business closure was consistent with Mrs. Shadd's inability to perform hairstyling alone.

Dr. Partridge's opinion is based not only on the clinical tests, but also on Mrs. Shadd's work experience put to her during her testimony. I am impressed with Dr. Partridge's evidence because she presented an independent, thoughtful and thorough analysis of Mrs. Shadd's cognitive problems as they relate to her workplace. I rely on Dr. Partridge's conclusion and her statement that Mrs. Shadd is not able to work as a part-time hairstylist without relatively frequent supervision and/or assistance.

Mrs. Shadd's post-accident accounting and tax records establish that her business failed after operating for five years without any meaningful profit. I agree with Dr. Partridge that Mrs. Shadd has attempted to cope as well as possible with her cognitive difficulties since the accident, and I accept that she would have worked more than part-time hours to build her own business if she was capable. Thus, I find that Mrs. Shadd's accident injuries necessitated hiring Ms. Tatsu in order for her to serve her clientele at the salon, and that maintaining the expense of a shop assistant caused the salon to be marginally profitable or not profitable.

Mrs. Shadd's inability to work without assistance convinces me that her labour is not commercially remunerative in any sense. I find that Mrs. Shadd has no residual earning capacity.

The Schedule provides that insurers shall promptly deliver a written LEC offer to an insured if the person continues to qualify for disability benefits two years after the onset of the disability. Liberty made an LEC offer to Mrs. Shadd of $69.45 per week on February 1, 1999, five years after the accident. The company has continued to pay her an LEC since that offer, and it is not disputed that Liberty is entitled to credit for these LEC payments.

The parties informed me at the hearing that they settled Mrs. Shadd's disability benefits under Part II of the Schedule up to May 1, 1998. Part VI of the Schedule provides that LEC benefits continue without interruption once the amount is agreed by the parties or determined by an adjudicator. I find that Mrs. Shadd is entitled to LEC benefits from May 1, 1998 onwards.

Mrs. Shadd's PEC of $334.25 per week must be indexed from 1994 to 1998 in order to arrive at her LEC benefit.¹⁵ Mrs. Shadd's LEC benefit is also indexed from 1998 onwards.¹⁶ The index rates are published in Commission bulletins each year.¹⁷

Using the Commission's index rates, I find that Mrs. Shadd is entitled to an LEC benefit of $353.32 per week in 1998, $355.79 per week in 1999, $365.04 per week in 2000, and $374.90 per week in 2001, less payments by Liberty, plus interest under section 46 of the Schedule.

Shop Assistant:

Liberty paid Mrs. Shadd's claims for a shop assistant through 1997. Mrs. Shadd claims that the $36,364.29 expense for Ms. Tatsu's salary between January 1998 and June 21, 2000 was a reasonable measure to reduce or eliminate the effects of her disability in her workplace under section 40 of the Schedule. The relevant portion states:

(2) The payments required by subsection (1) for the purpose of facilitating the insured person's reintegration into the labour market include payment for vocational rehabilitation measures that are reasonably necessary to enable the person to,

(a) engage in an employment that is as similar as possible to employment in which he or she engaged before the accident; or

(b) lead as normal a work life as possible.

[emphasis added]

(5) The payments required under this section include payment for all reasonable expenses incurred by or on behalf of the insured person as a result of the accident for a purpose referred to in clause (1)(a) or (b) for,

(a) social rehabilitation, including life skills training, family counselling, social rehabilitation counselling, financial counselling, home renovations and home devices to accommodate the needs of the insured person, vehicles, vehicle modifications to accommodate the needs of the insured person, and communication aids for the insured person's home;

(b) vocational rehabilitation, including employment counselling, vocational assessments, vocational training, academic training, workplace modifications and workplace devices to accommodate the needs of the insured person, and communication aids for the insured person's employment;

(e) other goods and services that the insured person requires.

[emphasis added]

The above language does not lead me to conclude that the drafters intended that the categories of expenses specifically listed in 5(a) and (b) are exhaustive. Quite the contrary, the words of 5(e) seem to expand accident benefits to other forms of rehabilitation or assistance that can be considered reasonable. The expansion of statutory accident benefits to all types of pecuniary loss claims under the 1994 version of the Schedule likewise supports that replacement labour is potentially covered under section 40.

Liberty incorrectly asserts that prior arbitration decisions rejected replacement labour in principle. Several decisions under the previous Schedule denied claims for replacement labour,¹⁸but left the door open for applicants to establish a job assistant's rehabilitation nexus.¹⁹ It is Mrs. Shadd’s burden to establish that Ms. Tatsu's salary expense was both reasonable and necessary for her to reintegrate into her hairstyling work.

Liberty's second argument that reimbursing Mrs. Shadd for a shop assistant provides her with double recovery seems plausible at first blush. Mrs. Shadd will receive an LEC based in part on the salary deductions for Ms. Tatsu, and correspondingly seeks reimbursement for them as rehabilitation expenses.

I am not persuaded that the drafters intended that insured persons are restricted from claiming for a rehabilitation assistant where these expenses are considered in the PEC because the Schedule is silent. The sections concerning the determination of residual earning capacity, the loss of earning capacity benefit or rehabilitation benefits do not specifically address this situation, and Liberty provided no case law or statutory authority to support its argument.

Mrs. Shadd's business lost money in 1994, returned a small profit in 1995 and 1996, and was unprofitable in 1997. Her history of four unsuccessful years working and operating the business convinces me it was not reasonable to expect that Mrs. Shadd would be able to reintegrate into salon work. I find that Mrs. Shadd's shop assistant expense is not reasonable.

If I am wrong on entitlement, then I would award Mrs. Shadd one third of her claimed expenses, the time Ms. Tatsu worked with her. Mrs. Shadd testified that she spent 10 to15 hours per week at the shop, and the time sheets show that Ms. Tatsu worked about 38 hours a week on average. Ms. Kemp's report essentially confirms these hours.

Ms. Tatsu did not assist Mrs. Shadd during the time she worked alone. Logically, if Mrs. Shadd had continued to rent a chair instead of expanding her business after the accident, she would not have needed Ms. Tatsu's assistance for the remaining 25.5 hours per week.

Thus, I am convinced that 25.5 hours for shop assistance was as a consequence of Mrs. Shadd's decision to expand her business by opening an independent salon. I would find that it is a reasonable rehabilitation expense for Ms. Tatsu to provide 12.5 hours per week direct assistance or supervision for Mrs. Shadd at the salon.

Mrs. Shadd did not present a monthly breakdown of the total $36,354.29 claim nor do I have all the time sheets for the whole period claimed. With the information provided, all I can determine is that Mrs. Shadd would be entitled to $12,121 for a shop assistant under section 40 of the Schedule, less Liberty's payments towards these expenses.

Housekeeping:

Under section 55 of the Schedule, Liberty is required to pay Mrs. Shadd's housekeeping and home maintenance expenses that she reasonably incurred as a result of the accident. Liberty does not strenuously oppose this claim.

Mrs. Shadd submitted receipts for housekeeping dated June 3, 18, 25, 1998, July 2, 9, 16, 23, 1998 for $40 each, another for $479.50 representing the period from August 17 to October 29, 1998, and a final one for $119, running from December 10, 1998 until February 15, 1999. Her yard maintenance expense receipts are: July 27, 1998 for $60 and $87.50 for July 30, 1998. I find that Mrs. Shadd's total yard and housekeeping expenses are $1,026.

Mrs. Shadd's long-time family physician, Dr. David Klein, initially recommended housekeeping assistance. He testified that Mrs. Shadd consistently complained about her forgetfulness, and would require flexibility in order to work. Dr. Emilie Newell also recommended weekly housekeeping assistance in her March 1998 report.

Acute Injuries Rehabilitation and Evaluation Centre (AIREC) is a designated assessment facility whose occupational therapist reviewed conditions at Mrs. Shadd's home in June 1997. Mrs. Shadd's house appeared unkempt. Mrs. Shadd explained to the therapist that she was disorganized performing household activities if interrupted or deciding what to do. Mrs. Shadd asked for household assistance, and the report concludes that the main problems limiting her function were organization, problem-solving, planning and memory.

I am particularly influenced by the reports of Parkwood Hospital which date from January through July 1998. These reports clearly document that Mrs. Shadd could not organize her household activities while attempting to maintain a part-time work schedule and manage the salon.

The reports from Parkwood Hospital and AIREC overwhelmingly convince me Mrs. Shadd was not coping with home maintenance chores. I reject Ms. Kemp's opinion that Mrs. Shadd should resume her household activities because she fails to consider her psychological problems.

I find that Mrs. Shadd's cognitive deficits rendered her unable to organize her homemaking chores while she was working part-time at the salon during 1997, 1998 and 1999. Consequently, I find that her claimed expenses are reasonable, and that Mrs. Shadd is entitled to reimbursement for $1,026 in housekeeping and home maintenance expenses under section 55 of the Schedule.

Mrs. Shadd testified that she has incurred further housekeeping expenses, but has not submitted them to Liberty since 1999 because the company refused payment. These expenses are not in issue, but the evidence demonstrates that Mrs. Shadd could not cope with her household duties while she was also working at the salon. It appears that Mrs. Shadd's housekeeping expenses are reasonable up until she closed the business.

There is evidence that Liberty has paid some of Mrs. Shadd's housekeeping expenses. In a December 23, 1998 letter Liberty sent to Mrs. Shadd's counsel, the company agreed to pay $907.01 for her submitted housekeeping bills through October 29, 1998, plus $40.17 for late interest as provided in the Schedule. Neither party led any evidence whether Mrs. Shadd received this money. Liberty is entitled to a credit for its payments towards these expenses.

Settlement of Housekeeping and Shop Assistant Expenses:

A 1998 arbitration decided that the parties settled Mrs. Shadd's claims for housekeeping and shop assistant expenses.²⁰ Arbitrator Baltman granted Mrs. Shadd a special award on the basis that Liberty knowingly failed to pay the negotiated benefits in accordance with the settlement terms.

After Arbitrator Baltman issued an order enforcing the negotiated terms, Mrs. Shadd submitted her post-settlement housekeeping and shop assistant expenses to Liberty. Mrs. Shadd cooperated with Liberty when the company asked to conduct in-home and job-site assessments.

Mrs. Shadd did not agree with Liberty's position that the settlement did not include further shop assistant and housekeeping. Arbitrator Miller issued a decision earlier this year that there was no meeting of the parties' minds concerning Mrs. Shadd's future entitlement to housekeeping and shop assistant expenses after the settlement.²¹

According to the doctrine of res judicata, I cannot decide an issue that has already been determined by another adjudicator. I have no jurisdiction to consider this issue.

Special Award:

An insurer may be liable to an insured person for a special award where payment of benefits are unreasonably withheld or delayed.²² Mrs. Shadd's argument that Liberty failed to pay her ongoing housekeeping and shop assistance expenses in accordance with its obligations under the April 16, 1998 settlement agreement fails because this issue has already been decided.

Mrs. Shadd also argues that Liberty unreasonably delayed or withheld her LEC benefits after the April 16, 1998 settlement through its failure to arrange a timely evaluation of her residual earning capacity (REC/DAC).

The facts relating to this argument are quite clear. The REC/DAC took place in November 1998, six months after Liberty's April agreement to reinstate her disability benefits. Under the process set out in the Schedule, Liberty was allowed to rely on the LEC amount determined in accordance with the REC/DAC's findings.

Mrs. Shadd's LEC, as determined by the REC/DAC, was less than her previous disability payments, and therefore she was not deprived of any benefits. I find that Liberty's delay in arranging the evaluation of Mrs. Shadd's LEC benefits until 1998 did not result in any unreasonable delay or withholding of her benefits.

Mrs. Shadd's third argument in support of a special award is based on Liberty's failure to pay her ongoing housekeeping and shop assistant expenses since the April 1998 settlement. The correspondence between Liberty's adjuster and Mrs. Shadd's solicitor indicates that the company acknowledged her entitlement and made some payments towards these expenses for the period through November 14, 1998.

In January 26, 1999 and October 19, 1999 letters, neither Liberty or its lawyer denied Mrs. Shadd's entitlement to continuing shop assistant expenses. Liberty wanted verification of its payment towards these expenses, and the amount Mrs. Shadd felt was outstanding. The company requested she forward business records showing payment of the shop assistant expense.

Mrs. Shadd sent Liberty time sheets, but never confirmed her payments to Ms. Tatsu. On January 26, 1999, Liberty's counsel again sought to confirm Mrs. Shadd's receipt of benefits. I am not persuaded that Liberty unreasonably delayed or withheld reimbursement for Mrs. Shadd's shop assistant expenses when proof of the payment was not submitted.

Mrs. Shadd likewise did not confirm or deny Liberty's claim that it paid $947.18 for her housekeeping expenses. There is no evidence that Liberty denied Mrs. Shadd's entitlement to housekeeping expenses, and I am not prepared to speculate if she was initially paid. I find that Mrs. Shadd is not entitled to a special award.

EXPENSES:

The parties can request an assessment of their expenses if they cannot agree.

November 28, 2001

Fred Sampliner Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 177

FSCO A99-001201

BETWEEN:

MARY K. SHADD

Applicant

and

LIBERTY MUTUAL FIRE 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. Liberty shall pay Mrs. Shadd an LEC benefit under Part VI of the Schedule of $353.32 per week from May 1, 1998 to December 31, 1998, $355.79 per week in 1999, $365.04 per week in 2000, and $374.90 per week in 2001, less payments by Liberty, plus interest under section 46 of the Schedule.

2. Liberty shall pay Mrs. Shadd $1,026 for housekeeping expenses, less payments, plus interest under section 46 of the Schedule.

3. Mrs. Shadd's claims for a shop assistant and a special award are dismissed.

November 28, 2001

Fred Sampliner Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule" refers to the original O.R. 776/93, and "1995 Schedule" refers to O.R. 776/93 as amended.
2. 2Part VI of the Schedule
3. 3Section 28 of the Schedule
4. 4The parties agreed Liberty is entitled to a $13,594.47 credit for disability payments made between May 1, 1998 and May 11, 2001, plus a credit for payments thereafter at the rate of $73.18 per week. The parties stated they could calculate the LEC once the REC and PEC are determined, apply it against the above credit and current weekly payments to Mrs. Shadd, as well as determine any overdue interest under the Schedule.
5. 5Subsection 29(2) of the Schedule
6. 6Bonitatibus and Wellington Insurance Company (OIC A-000082, March 16, 1992), Kahkesh and Lloyd's Non-Marine Underwriters (OIC A-000378, March 31, 1992) affirmed on appeal, Ntiri and Prudential of America General Insurance Company (Canada) (OIC A-002213, April 19, 1993)
7. 7Tip estimates have been accepted in Ntiri (Supra) and Wiseman and Coachman Insurance Company (OIC A-005706, June 10, 1994)
8. 8Subsection 29(3) of the Schedule as interpreted in Lehman and GAN Canada Insurance Company (OIC A96-001417, October 27, 1997)
9. 9Indexed for 1996
10. 10Report of Ms. Debra Chiasson, Appendix V and Note 6
11. 11Liberty February 1, 1999 letter
12. 12Mrs. Shadd's PEC must be indexed to 1998 in accordance with section 79(4) of the Schedule
13. 13Section 30 of the Schedule
14. 14Mrs. Shadd objected to the introduction of Dr. Upton's report, arguing it violates the "deemed undertaking" rule. Mrs. Shadd agrees that Dr. Upton's report is relevant to the issues here, but she argues that it was prepared for defence to her tort claim, and should not be admitted in this proceeding without leave of the Court. Liberty argues that it did not receive notice of Mrs. Shadd's objection to Dr. Upton's report until immediately before the hearing. The company submitted it would require an adjournment if Dr. Upton's report was not admitted in order to prepare its case. I find that Mrs. Shadd did not give Liberty notice of her objection to Dr. Upton's report until the time of the hearing, and therefore cannot rely on the "deemed undertaking" rule as a basis to object to the introduction of Dr. Upton's report. I admit Dr. Upton's report into evidence.
15. 15Part VI and subsection 49(4) of the Schedule
16. 16Subsection 79(5) of the Schedule
17. 172% for 1995, 2.3% for 1996, 1.5% for 1997, 1.6% for 1998, .7% for 1999, 2.6% for 2000, 2.7% for 2001
18. 18Saini and Wellington Insurance Company (OIC A-001515, March 18, 1994), Meandro and Pilot Insurance Company (OIC A-004433, June 7, 1994), Oliveira and Zurich Insurance Company (OIC A-002691, August 10, 1993)
19. 19Zehr and The Guarantee Company of North America (OIC A-001963, July 30, 1993)
20. 20Shadd and Prudential of America General Insurance Company (Canada), (FSCO A97-000364, October 2, 1998)
21. 21Preliminary issue decision of Arbitrator Miller dated February 9, 2001
22. 22Subsection 282(11) of the Insurance Act