Neutral Citation: 2001 ONFSCDRS 179
FSCO A00-000543
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ANDREW L. LUKACHKO
Applicant
and
ALLIANZ INSURANCE COMPANY OF CANADA
Insurer
REASONS FOR DECISION
Before: David Muir
Heard: August 8, September 17 and 18, 2001, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances: Mr. Andrew Lukachko Andrew T. Graham for Allianz Insurance Company of Canada
Issues:
The Applicant, Andrew L. Lukachko, was injured in a motor vehicle accident on December 7, 1998. He applied for and received certain statutory accident benefits from Allianz Insurance Company of Canada ("Allianz"), payable under the Schedule.1 Other benefits were claimed by Mr. Lukachko and either terminated or denied from the outset by Allianz. The parties were unable to resolve their disputes through mediation, and Mr. Lukachko 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:
Is Mr. Lukachko entitled to receive a weekly income replacement benefit pursuant to section 4 of the Schedule?
Is Mr. Lukachko entitled to payments for housekeeping and home maintenance services pursuant to section 22 of the Schedule in the amounts of $696 (for roofing), $4,415 (for general maintenance of his properties) and $986.08 (for a bill from Homestead Home Improvements)?
Is Mr. Lukachko entitled to payments for the cost of examinations by Dr. M. Charendoff, pursuant to section 24 of the Schedule? Prior to the hearing Allianz paid Dr. Charendoffs account. Despite the payment of the account, Mr. Lukachko took the position that the payment was improper and he claimed the payment of the amount of the account with interest, to him.
Is Allianz liable to pay Mr. Lukachko's expenses in respect of this arbitration under section 282(11) of the Insurance Act, R.S.O. 1990 c. I.8?
Mr. Lukachko also claimed interest on any amounts owing.
Result:
Mr. Lukachko is not entitled to a weekly income replacement benefit pursuant to section 4 of the Schedule.
Mr. Lukachko is entitled to payments for housekeeping and home maintenance services pursuant to section 22 of the Schedule in the amount of $4,451.
Mr. Lukachko is not entitled to the principal amount of the cost of an examination by Dr. Charendoff, pursuant to section 24 of the Schedule.
Mr. Lukachko is entitled to interest on unpaid amounts found to be owing to him calculated pursuant to subsection 46(2) of the Schedule. In addition, Mr. Lukachko is entitled to interest on the principal amount of the Dr. Charendoffs account.
BACKGROUND:
In order to establish entitlement to a weekly income replacement benefit, Mr. Lukachko must establish that he has suffered, as a result of the accident, a substantial inability to perform the essential tasks of his pre-accident employment. He must also establish in this case that he was employed or self-employed at the time of the accident.
Similarly, in respect of a claim for house cleaning and home maintenance, he must establish that he suffered impairments from the accident, which resulted in a substantial inability to perform his pre-accident housekeeping and home maintenance tasks.
Allianz states that Mr. Lukachko has not suffered impairments sufficient to establish entitlement to either IRB's or housekeeping and home maintenance benefits. Alternatively, if the evidence is sufficient to support entitlement to these benefits, it takes the position that Mr. Lukachko was not employed or self-employed at the time of the accident and therefore not entitled to IRBs. In respect of the housekeeping and home maintenance claim, Allianz submits that the amounts claimed are at times in excess of $100 in a week, the maximum allowed under the Schedule and must be reduced accordingly.
Mr. Lukachko argues that he has suffered impairments as a result of the accident that have prevented him from carrying on his pre-accident activities, including the housekeeping and home maintenance tasks at his Toronto home and his country property. Mr. Lukachko concedes that he was not employed at the material times but takes the position that he was self-employed in the development of the country property at the time of the accident and therefore is entitled to IRBs.
The Evidence
Disability
Prior to the accident Mr. Lukachko was a physically active individual. Amongst his many activities, he was responsible for the maintenance of the yard, garden and exterior of the house he shared with his spouse in the city. His activities here included general yard work: removing garbage; raking leaves and grass cuttings; mowing the lawn in summer and snow shovelling in winter. Some activities were only required periodically: preparation of rose beds and other gardens for winter; annual pruning of several weeping willow trees on the property. This latter task required his climbing on a ladder with a chain saw.
Mr. Lukachko also owned a country property which he devoted considerable energy to developing and maintaining. The property consisted of two principal buildings: a 1800 square foot bungalow dwelling and a smaller log cabin. In addition there was a log gazebo and at the time of the accident a two-car garage under construction. There are two aspects to Mr. Lukachko's claims with respect to this property. He has made claims for housekeeping and home maintenance of the country property for tasks such as grass cutting, spring clean up of the grounds and buildings and the renovation of a washroom in the log cabin.
In addition the development and maintenance of the country property provide the basis for Mr. Lukachko's claims that he is entitled to an income replacement benefit based on a valuation of his labour in developing the "business" of the country property. The work performed by Mr. Lukachko on the property over the years included construction work, carpentry and property management - the rental of the bungalow on the country property was a source of revenue to Mr. Lukachko. More will be said about the employment aspects of this claim below.
Mr. Lukachko testified that he cannot repeatedly bend or twist at the waist, cannot lift heavy weights and cannot use power tools or a lawn mower. He told Dr. Hunter in March 2001 that he suffered low back "discomfort," that he could not do repeated bending and could not lift articles more than 20 or 30 lbs. He also reported to Dr. G. Hunter about pain in the neck, especially when driving a car, and occasional dizziness. These impairments prevent him from performing the housekeeping and home maintenance tasks for which claims have been made. Specifically, Mr. Lukachko testified that he could not cut the grass, rake leaves or pine needles, shovel snow, prune trees or prepare the flower beds for winter. He also testified that these impairments prevented him from performing the construction, carpentry and property management tasks associated with the country property.
Mr. Lukachko testified that he had made attempts to return to some of his pre-accident duties but was unable to do so. For example, he testified that he attempted to vacuum out his car and in doing so twisted his back causing him debilitating pain, which required a visit to his family doctor. There is also a record of his complaining that he attempted to shovel snow and was unable to do so because of pain in his lower back.
The Medical Evidence
The evidence establishes that Mr. Lukachko was the driver of a 1990 Dodge Spirit. The vehicle was stopped at or near the intersection when it was struck from behind by another vehicle.
Mr. Lukachko testified that he was shaken by the collision, but was able to drive home. He reported the collision to the insurance company and then to a Collision Reporting Centre.
Mr. Lukachko consulted his family physician, Dr. E. Dobkin, two days later. Dr. Dobkin diagnosed WAD Grade II with soft tissue injuries to Mr. Lukachko's back and hips. At that time Mr. Lukachko was reported as being unable to lift, bend, stand, or walk for long distances.
Dr. Dobkin referred Mr. Lukachko to the Bayview North Rehabilitation Inc. An assessment was performed there in late December 1998. The assessment report was not entered into evidence, although it is referred to in various other documents. Bayview apparently recommended a course of 40 treatment sessions. Mr. Lukachko only attended two - he testified that he ceased attendance because of a letter from the Insurer indicating that it would not fund treatment without a treatment plan being submitted to it for prior approval.
The treatment plan was submitted to Allianz on January 5 and 16 sessions were approved the following day. Mr. Lukachko did not attend for further treatment but requested a Med-Rehab DAC.
Before the DAC took place Mr. Lukachko was assessed by Dr. Barry Malcolm, an orthopaedic surgeon, at the request of Allianz. At that time, Mr. Lukachko is reported to have complained of "intermittent posterior neck/trapezius ridge pain" that was aggravated by rotation, extension or flexion. He also complained of diffuse low back pain which was aggravated by standing for long periods of time or walking - Mr. Lukachko had a practice of walking four miles a day prior to the accident. After the accident he could do no more than two miles before having to sit according to the report of Dr. Malcolm.
Dr. Malcolm diagnosed an acceleration-deceleration injury to his cervical spine resulting in a WAD II as well as a myofascial strain superimposed on pre-existing but asymptomatic lumbar spondylosis of a moderate to serious degree.
Dr. Malcolm offered the following prognosis:
However, given the magnitude of the age related changes in his lumbar spine, it is almost certain that a similar degree of cervical spondylosis pre-existed the motor vehicle accident in question. Given this pre-existing situation, it is my opinion that the prognosis for timely resolution of complaint and possible return to pre-accident function in the context of usual and accustomed healing times is guarded. Longer functional and symptomatic recovery times are anticipated.
I anticipate that the traumatic effects of the soft tissue injuries sustained in the motor vehicle accident will subside, resulting in a recovery of accustomed function. The timeframe for resolution of subjective complaint, however, is indeterminate.
Dr. Malcolm recommended a physical restoration treatment program of four to six weeks which should include, education in neck and back sparing techniques, pain control strategies along with a physical restoration/work hardening program. If such a program were undertaken, Dr. Malcolm felt that Mr. Lukachko would be able to return to his pre-accident level of function.
Based on the treatment suggested immediately above, I would foresee that by the completion of his physical restoration strategy, he should be medically capable of resuming full and essential duties although he might require some pacing. Given that it is his ongoing pain which is the expression of his disability, it will be his ability and motivation to deal with residual symptoms that will be the major determinate of his successful return to his usual and accustomed duties.
No such treatment was ever undertaken by Mr. Lukachko.
Shortly after seeing Dr. Malcolm, Mr. Lukachko was assessed by a Multi-Disciplinary Medical and Rehabilitation DAC on February 26 and March 2 and 3, 1999. Dr. H. Schutz, a neurosurgeon; B. Koreen, an Occupational Therapist and C. Quinton, a registered physiotherapist who conducted a Functional Capacities Evaluation, assessed Mr. Lukachko. Some of the extant medical documentation was provided to the DAC, however it appears that Dr. Malcolm's recent assessment of Mr. Lukachko was not available, perhaps because its release was virtually coincident with the DAC.
From a neurological perspective Mr. Lukachko was unaffected by the motor vehicle accident, according to Dr. Schutz. Dr. Schutz reviewed the existing medical file and noted the recommendation of
Bayview that Mr. Lukachko enter a program of therapy including electrotherapy, massage therapy, active exercise for range of movement, strength and endurance.
Dr. Schutz concluded that while physiotherapy might be of some value he would have recommended an active exercise program. In Dr. Schutz view this program should be a self-directed program of exercises to increase mobility and strength. Dr. Schutz recommended one session with a physiotherapist to review neck and back stretches.
The most significant element of the DAC as it relates to the issues in dispute is the functional capacities evaluation. The evaluators, Ms. Koreen and Ms. Quinton found Mr. Lukachko to be cooperative and they judged his performance to be consistent during the eight hours of assessment conducted over two days. The assessors noted that Mr. Lukachko reported that he was limited in his activities by pain but that he attempted to perform all of the activities requested of him.
Mr. Lukachko in his evidence at the hearings said that the assessments undertaken by Ms. Koreen and Ms. Quinton were very thorough. Their assessment of Mr. Lukachko was summarized in a table, which is reproduced below.
| Critical Job Demands | Physical Work Strengths | Job Match Yes or No |
|---|---|---|
| Weightbearing | Demonstrated ability to consecutively weightbear for 30 minutes | Yes |
| Stair climbing | Able to go up and down two flights of stairs using reciprocal patterns | Yes |
| Lifting | Lifting up to fifteen pounds non-repetitively and rarely | Yes |
| Pushing/Pulling | 30 lbs/35 lbs | Yes |
| Forward reaching | 5 minutes consecutively | Yes |
| Right and/or left hand use | Demonstrated right and/or left hand use | Yes |
From this data the assessment team concluded that Mr. Lukachko had the physical ability to complete his pre-accident household management tasks using pacing as required and with some pain. They concluded that he did not have the ability to re-gravel the 600-foot driveway a task reportedly required annually. The basis for these conclusions is not entirely clear. There is data recorded respecting Mr. Lukachko's functional capacity but no detailed descriptions of the physical demands of the requirements of his pre-accident activities.
Mr. Lukachko was next seen by Dr. Charendoff, an orthopedic surgeon, at the request of his counsel at the time. Dr. Charendoff saw Mr. Lukachko on at least two occasions in June and September 1999 (and perhaps in July as well). In coming to his conclusions he had the benefit of the DAC report as well as the report of Dr. Malcolm.
Dr. Charendoff offered the following diagnosis of Mr. Lukachko and prognosis for recovery.
This accident resulted in soft tissue injuries which were inflicted upon the muscles, ligaments, spinal joints and discs, all of which were severely sprained. There was no evidence of a fracture, nor of a ruptured disc.
It is important to note that his x-rays reveal advanced degenerative changes involving the discs and the facet joints (osteoarthritis). These organic changes are age related and not caused by the accident. However they indicate a condition of vulnerability in his neck and lower back which would cause the patient to be more susceptible to injuries than if his spine were normal. As stated he was previously essentially asymptomatic in these areas. While the x-ray changes are not caused by the accident, the symptoms arising in those areas are certainly accident related.
In conclusion, as a result of the motor vehicle accident the patient sustained multiple post-traumatic soft tissue injuries inflicted upon his already vulnerable neck and lower back. These injuries have not as yet resolved. He also experiences left sided sciatica which is a manifestation of nerve root irritation.
I believe that the prognosis must remain guarded at least for the next year or so. There is no assurance from the information at hand that the patient will indeed recover. The more likely probability is, that he will be left with permanent residuals which will have an impact on his lifestyle.
Mr. Lukachko was later assessed by Dr. Gordon Hunter another orthopedic surgeon, at the instance of Allianz. On page 3 of his report dated March 22, 2001, he records the following:
In summary, he does have low back pain and he complains that he is incapable of hard physical work and working as a carpenter since the accident in 1998. I think it is important to point out that he is 74 and therefore it is reasonable to reduce his physical activities. He also complains of being easily fatigued during the day and occasional dizziness with reduced hearing.
I think, therefore, it would be unsafe for him to be involved in very heavy work and particularly where he is required to climb ladders and lift heavy articles at the same time. It will be up to the Courts to decide whether his complaints are entirely related to the accident in December, 1998.
In response to the written question from Allianz for clarification of his final comments Dr. Hunter offered his opinion that having regard to the other complicating factors in Mr. Lukachko's medical background, the contribution of the motor vehicle accident would be "in the region of less than 10 to 20 percent at the most."
Analysis
I find that Mr. Lukachko suffered impairments as a result of the accident that significantly affected his ability to function as he had prior to the accident. I find that as a result of pain in his lower back, Mr. Lukachko was substantially unable to perform many of his pre-accident housekeeping and home maintenance tasks. Specifically, I find that Mr. Lukachko was unable to cut the grass, rake leaves or pine needles, shovel snow, prune trees or prepare the flower beds for winter. He was also unable to perform the roofing job required in December/January 1998/99; engage in much of the work associated with the spring cleanup of the country property in April 1999; as well as undertake the bathroom renovation in July 1999.
I also find that he became unable to perform many of the physical tasks essential to the development of the country property. These tasks included from time to time: Construction work: the framing of interior walls; insulation of interior and exterior walls; application of exterior cladding materials, roofing; installation of windows;
Landscaping: Planting of hundreds of trees; dredging of a pond, seeding lawns Stone masonry: construction of 400 feet of stone wall, from four to eight feet high and two feet wide.
The medical evidence taken as a whole does not suggest that Mr. Lukachko's complaints of debilitating pain are imaginary. The medical evidence also sustains the conclusion that the accident materially or substantially contributed to his difficulties. The most direct statement of the extent of the impact of the accident on Mr. Lukachko is that of Dr. Hunter who put it at "10 to 20 percent at the most." There is no medical evidence which would support a finding that the accident's contribution was less than that suggested by Dr. Hunter. Mr. Lukachko was asymptomatic prior to the accident. I find that the accident materially contributed to Mr. Lukachko's impairments.
I accept Dr. Hunter's opinion that it would be unsafe for Mr. Lukachko to engage in the heavy physical work associated with many of his pre-accident activities.
I have considered the assessment of Mr. Lukachko's functional abilities conducted as part of the Med-Rehab DAC. A difficulty with the report is that it does not clearly relate his functional abilities as determined in the assessment with the physical demands of the pre-accident activities undertaken by Mr. Lukachko. To cite just one example, the report notes that one of Mr. Lukachko's pre-accident activities was the laying of patio stones as required, but nowhere is there any analysis of what the physical demands of that kind of work are. As part of the assessment Mr. Lukachko was required to lift 10 lbs., to lift and carry at waist level up to 15 lbs., and to push and pull up to 30 lbs. What, if any relationship these abilities may have to the task of laying patio stones, or the other work that he performed, is not discussed in the report. In short, while I accept the assessment of Mr. Lukachko's functional capacities, the lack of any discussion of the physical requirements of his pre-accident activities in issue does not assist in assessing Mr. Lukachko's evidence that he can no longer perform many of those activities.
Mr. Lukachko testified that he cannot perform many of his pre-accident activities. When challenged by Allianz about some of the tasks bundled together in an invoice2 Mr. Lukachko readily admitted that there were some things included in that invoice that he could still do and others that he would have been incapable of on his own even prior to the accident. There are no substantial questions raised about Mr. Lukachko's credibility. None of the medical assessors questioned the genuineness of his complaints. During the hearing, Mr. Lukachko gave his evidence in a truthful manner.
Accordingly, I have accepted his evidence respecting his physical capacities both before and after the accident as well as his evidence about his ability to perform the tasks for which claims have been made.
Housekeeping and Home Maintenance Expenses
I find that Mr. Lukachko is entitled to some of the housekeeping and home maintenance expenses claimed.
Mr. Lukachko submitted lists of housekeeping and home maintenance tasks that were performed by his son at the city home and the country property with a corresponding amount for each entry. The lists are not week-by-week but in some cases list several weeks together with a sum attached to that group of weeks. On several weeks the amounts claimed exceed the maximum $100 per week allowed under the Schedule.
In addition Mr. Lukachko made claims for a roofing job on the city property, a spring clean up at the country property and the renovation of a bathroom at the country property. The amounts claimed are for the job performed by the persons Mr. Lukachko contracted in each case and exceed the $100 per week maximum provided for in the Schedule. Mr. Lukachko submitted that it was in the nature of the work that it could not be spread out over a period of weeks in order to meet the limits in the Schedule and therefore these expenses should be allowed. He also submitted that I have the authority to take such extenuating circumstances into account and waive the maximum weekly limit on such expenses.
I find that the language of the Schedule is clear and does not allow for an increase in the maximum allowable for a housekeeping and home maintenance expense because the nature of the work required to be done could not be spread over a period of weeks or for any other reason. Accordingly in any week where the amount claimed exceeds the maximum allowable expense it will be reduced to $100.
Allianz did question whether several of the tasks for which claims have been made were not things that would have required assistance prior to the accident. Mr. Lukachko did agree that some were, particularly in relation to the spring cleanup at the country property. In the end, however Allianz conceded that it made little if any difference as the deduction of expenses related to those tasks that would have required assistance prior to the accident did not affect the amounts claimed because of the $100 maximum payable each week.
Attached as an appendix to this decision is a table setting out the necessary adjustments to the housekeeping and home maintenance claims made by Mr. Lukachko.
The total of the claims made by Mr. Lukachko related to housework and home maintenance were $6,297. The reductions from that amount outlined in the appendix total $1,846. Accordingly, I find that Mr. Lukachko is entitled to reasonable housekeeping and home maintenance expenses in the amount of $4,451.
Weekly Income Replacement Benefits
Evidence
Mr. Lukachko claims an income replacement benefit based on a valuation of the labour that he contributed to the development of his country property over a number of years. He says that he was self-employed in a business to develop the property with a view to both capital gain on his investments and the generation of rental income.
The relevant provisions of the Schedule are set out below:
The insurer shall pay an insured person who sustains an impairment as a result of an accident an income replacement benefit if the insured person meets any of the following qualifications:
The insured person was employed at the time of the accident and, as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of that employment.
The Schedule also describes employment in subsection 2(5):
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.
In order to establish an entitlement Mr. Lukachko must establish that he was employed and that he has suffered a substantial inability to perform the essential tasks of that employment.
Mr. Lukachko was a graphic designer for many years. He retired from full-time employment in the early 1980's and worked as a free lancer until 1990. At the time of the accident and afterwards he thought of himself as retired and whenever asked in the context of assessments in this matter described himself as such. The notion that he was self-employed only came to Mr. Lukachko at some point well after the accident when, he testified, he began to consider the Schedule more carefully after mediation of some of the disputes in this arbitration. Mr. Lukachko originally sought non-earner benefits, but testified that he came to the realization that he was not entitled to that benefit but was entitled to income replacement benefits. He accordingly withdrew his original claim and made an application for mediation of a claim for income replacement benefits.
Mr. Lukachko described his employment as the design and building of a country complex for the purposes of capital gain and rental income. In 1969 with $700 and a solid credit rating Mr. Lukachko began what he described as a business plan to speculate in land. After a series of property transactions, Mr. Lukachko purchased a 100-acre property near Bobcaygeon in 1974. This property was subdivided and two of three lots were sold in 1976. Mr. Lukachko decided to design and build the country complex on this third 45-acre parcel of land. Over the course of the next 22 years Mr. Lukachko devoted considerable energy to the development of this property. He testified that on average over the 22-year period from 1976 to 1998 he estimated that he devoted 20 hours/week to the property. Based on the dates attached to the photographs entered into evidence much of the work appears to have been done between 1976 and 1986 although there appear to have been some additions to the main house in 1992 or 1993.
Mr. Lukachko gave very limited evidence about what work was ongoing in the two years immediately prior to the accident. The only concrete evidence of work in the two years prior to the accident was his testimony related to the beginnings of a two-car garage, which collapsed, according to Mr. Lukachko, because he was unable to finish it before winter as a result of the accident. On the basis of the pictures of the structure provided by Mr. Lukachko it appears unlikely that any substantial time had been spent on the project prior to the accident in December 1998.
Mr. Lukachko tendered a newspaper advertisement indicating that the property was listed for sale for $359,000. Mr. Lukachko suggested that this established the value of the property and by inference a measure of his capital gain. At best the listing indicates that Mr. Lukachko and a real estate agent felt the property might fetch that amount however it does not establish the worth of the property. In addition there was no evidence of the purchase price of the property or the capital cost of the improvements that were made to it. On the basis of the evidence tendered I am unable to come to any conclusion about the extent of the potential capital gain that might be realized on this property.
Mr. Lukachko also testified that he rented out the bungalow. At the hearing he initially testified that he could not recall whether he filed income tax returns in 1997 or 1998. However in a letter to counsel for Allianz dated March 9, 2001, Mr. Lukachko wrote that he did not file tax returns for those years and further that he had no revenue to report in respect of the rental of the bungalow because the "net income was far less than the capital cost allowance . . ." When reminded of the letter Mr. Lukachko adopted the statements made in it.
Analysis
I have already found based on his testimony and the medical evidence set out above that Mr. Lukachko has suffered, as a result of the accident, a substantial inability to perform many of the essential manual tasks that he had performed in the past to develop the country property.
There were other intellectual tasks such as the buying and selling of property for purposes of capital accumulation; the development for approval of plans of subdivision; the design and drafting of construction plans, the renting of the bungalow, etc. all of which were performed by Mr. Lukachko in relation to the country properties over a number of years. I find that Mr. Lukachko is still able to perform these tasks however they are no longer the essential tasks in developing the country property.
However for the reasons that follow I find that Mr. Lukachko was not employed, or self-employed at any relevant time and consequently is not entitled to income replacement benefits.
Mr. Lukachko had retired from his employment as a graphic designer several years prior to the motor vehicle accident. In making this claim Mr. Lukachko, relies on a potential capital gain that might be realised if and when he disposes of the property and the potential for rental income. Mr. Lukachko relied on the language of section 2(5) set out above. In particular he submitted that he was employed because he was "for profit or other remuneration" engaged in employment.
I find that Mr. Lukachko's position that he was employed in a business to develop the country property, is an after the fact attempt to match his activities in respect of the property with a remedy provided by the Schedule. What Mr. Lukachko is seeking in fact is compensation for his efforts in the past (primarily) in developing the capital value and revenue potential of the country property.
Mr. Lukachko candidly admitted he did not consider himself to be self-employed while engaged in the hard work of developing the country property. Anytime he was asked for his employment status during the course of his transactions with Allianz he described himself as retired. An important element of an employment relationship is of course the intentions of the parties. This is also true of someone who is self-employed - did they consider themselves to be employed. Mr. Lukachko only considered the possibility that he was self-employed when he reviewed the language of section 2(5) above.
Mr. Lukachko earned no income from the work that he performed indeed, he apparently never considered the possibility of income, other than rental income, until well after the motor vehicle accident. It was in anticipation of this arbitration that he developed a notional wage for the work that he performed based upon what he considered would have been fair compensation for the kind of work that he performed over the years. It is central to an employment relationship, even self-employment, that there be a wage paid. It may be that the wage is deferred; perhaps for an extended period of time, however in this case there were no wages payable. The "wage" that Mr. Lukachko is seeking to replace with an income replacement benefit is a fiction, the compensation for Mr. Lukachko's work was always intended to be realised in the future in the form of anticipated capital gains and possible rental income.
Mr. Lukachko relied upon the possibility of rental income and potential capital gains on the country property as the "profit or other remuneration" required for employment. He relies upon these things to establish employment as described in section 2(5) of the Schedule, but because there is no actual rental income or capital gain he must create a notional wage based on a valuation of his labour on the property over the years. The Schedule contemplates a very broad concept of employment including self employment. It does define employment in part, in terms of the revenue that accompanies employment and in doing so broadens employment revenue beyond wages or a salary. However, section 2(5) does require that there be remuneration of some kind. It does not contemplate using a revenue source to establish theoretical entitlement and then something else entirely to provide the basis for calculating actual entitlement to the income replacement benefit.
There may be no bright line separating a hobby or pastime that is a potential source of capital growth or income on one hand, and employment (or self-employment) on the other, but the Schedule makes clear that what is compensated is lost wages and other remuneration earned for work performed. Although Mr. Lukachko undoubtedly devoted considerable energy to the development of the country property, there is no evidence of a business here. In this regard I note that the "remuneration or other profit" that provides the basis for Mr. Lukachko's position that he was self-employed is not directly affected by his impairments flowing from the accident.
I find that Mr. Lukachko was not self-employed because he was not engaged in an activity that was intended to produce an income. Whatever limited revenue the property might have generated was as a consequence of the ownership of the property and not derived from employment.
Even if Mr. Lukachko were able to establish that he was employed in the sense contemplated by the Schedule there is no income from that employment. There is very little evidence of the rental income the property generated before the accident, although Mr. Lukachko testified that the bungalow was rented for periods of time. Mr. Lukachko has conceded that whatever rent was forthcoming in the two years prior to the accident was greatly exceeded by the capital cost allowance of the property. There is no evidence of rental income after the accident. Because Mr. Lukachko was over 65 at all relevant times he is not entitled to the benefit of subsection 6(5) of the Schedule, which might have allowed him to add 80 percent of his post-accident losses from self-employment to his income.
For the reasons already set out, I find that Mr. Lukachko was not self-employed within the meaning of subsection 2(5) of the Schedule. If that conclusion is incorrect, I also find that he earned no income in the 52 weeks prior to the accident and accordingly if entitled to an income replacement benefit, the amount of the benefit would be $0.
Dr. Charendoff's Report
Evidence
Mr. Lukachko was referred to Dr. Charendoff by his lawyer at the time. Dr. Charendoff saw Mr. Lukachko on at least two occasions. He prepared a report dated September 20, 1999, for Mr. Lukachko's lawyer.
The report was the subject of a failed mediation and was identified as in issue in dispute between the parties at the Pre-Hearing. When this matter first came before an arbitrator for a hearing in April 2001, Allianz indicated that it would pay the amount of Dr. Charendoff's account. Mr. Herman, an employee of Allianz, contacted Dr. Charendoffs office and was advised that an amount was still outstanding and that amount without interest was subsequently paid at some point prior to the August 8 hearing date.
Mr. Lukachko complains that this payment was improper. He suggested that Dr. Charendoff was probably paid twice and should not have accepted payment from Allianz. He offered no concrete evidence of these suppositions.
Analysis
I find based on the evidence presented at the hearing that at some point prior to the April arbitration dates Allianz determined that the account of Dr. Charendoff was a proper section 24 expense and decided to pay it. Although the decision to do so was made prior to the April 9, 2001, hearing date, the payment was not made until just before the August 8, 2001 date. Before making the payment Allianz contacted Dr. Charendoffs office, clarified that the account was outstanding and paid it.
Mr. Lukachko is not entitled to be paid the principal amount of Dr. Charendoffs account. There is simply no basis for such an order. The account was outstanding and Allianz concluded that it was a proper expense. Section 45 of the Schedule contemplates the payment of invoices, directly, by insurers to third service providers.
Mr. Lukachko also claims an entitlement to interest on the principal amount of the account. The Schedule provides in section 46(1) that a payment is overdue when it is not paid within the time required under Part X of the Schedule. As I read section 41 of the Schedule, an expense such as Dr. Charendoffs account was overdue 30 days after Allianz received an application for the benefit from Mr. Lukachko. That date is not in evidence.
I find based on the evidence including the report of Dr. Charendoff as well as the evidence of Mr. Herman, that the report was a reasonable expense under section 24 and ought to have been paid within 30 days of Allianz's receipt of an application for the benefit. I also find that Mr. Lukachko is entitled to interest on the amount of the invoice, calculated in accordance with the Schedule from 30 days after the date the application for the benefit was received by Allianz to the date it was ultimately paid. I leave it to the parties to agree on those dates. In the event that they are unable to do so, I will reconvene this hearing to deal with the issue.
EXPENSES:
The parties may now speak to me on the issue of expenses if unable to resolve the issue themselves.
November 30, 2001
David Muir Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 179
FSCO A00-000543
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ANDREW L. LUKACHKO
Applicant
and
ALLIANZ INSURANCE COMPANY 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:
Mr. Lukachko is not entitled to a weekly income replacement benefit pursuant to section 4 of the Schedule.
Mr. Lukachko is entitled to payments for housekeeping and home maintenance services pursuant to section 22 of the Schedule in the amount of $4,451.
Mr. Lukachko is not entitled to the principal amount of the cost of an examination by Dr. Charendoff, pursuant to section 24 of the Schedule.
Mr. Lukachko is entitled to interest on unpaid amounts found to be owing to him calculated pursuant to subsection 46(2) of the Schedule. In addition, Mr. Lukachko is entitled to interest on the principal amount of the Dr. Charendoffs account.
November 30, 2001
David Muir Arbitrator
Date
Appendix
| Exhibit | Allowed | Not allowed/Reduced |
|---|---|---|
| #10, Tab 15, p.2 | March 27/99 | |
| #10, Tab 15, p.2 | December 28, 29 and 21 | $100 paid in respect of this week - see exhibit 16 |
| #10, Tab 15, p.2 | January 3, 4, and 5 | $100 paid in respect of this week - see exhibit 16 |
| #10, Tab 15, p.5 | Claims allowed except - | Week of April 17 - claim of $180 reduced to maximum $100 |
| #10, Tab 15, p.6 | Claims allowed except - | March 18/19 - claim of $200 reduced to maximum $100 April 29 - claim of $40 in same week as Homestead (spring cleaning) total exceeds maximum of $100 |
| #10, Tab 15, p.7 | Claims allowed except - | July 13 - claim for grass cutting in same week as renovation of bathroo; exceeds maximum claim of $120, reduced by 1/3 or $40 |
| #10, Tab 15 pp. 8-14 | Homestead - Spring clean up: claim of $986 reduced to maximum of $100 Danny Galligan - bathroom renovation in cabin: $250 reduced to maximum of $100 |
Footnotes
- The 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.
- See for example Exhibit 4 pp. 8-12, (Tab 15 of brief) where a number of tasks are noted together in the invoice for a spring clean up of the country property.