Financial Services Commission of Ontario
Neutral Citation: 2001 ONFSCDRS 32
FSCO A00-000572
Between:
Alfred Charles
Applicant
and
Dominion of Canada General Insurance Company
Insurer
Decision on a Motion for Interim Benefits
Before: John Wilson
Heard: December 18, 2000 at the Offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
David S. Wilson for Mr. Charles
Christopher J. Schnarr for Dominion of Canada General Insurance Company
Issues:
The Applicant, Alfred Charles, was injured in a motor vehicle accident on June 21, 1995. He applied for and received statutory accident benefits from Dominion of Canada General Insurance Company ("Dominion"), payable under the Schedule.1 Dominion disagreed with Mr. Charles on the method of calculating the weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Charles applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Mr. Charles has brought a motion pursuant to section 65 of the Dispute Resolution Practice Code — Third Edition for interim benefits to be paid to him pending the resolution of his dispute with Dominion.
The issue on this motion is:
- Is Mr. Charles entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act?
Mr. Charles also claims interest on any amounts owing and his expenses incurred on this motion.
Result:
Dominion shall pay Mr. Charles interim benefits.
The issue of expenses may now be spoken to.
Evidence and Analysis:
Section 279(4.1) of the Insurance Act gives arbitrators the discretionary authority to make interim orders pending the final order in any matter.
Interim orders are not a routine part of the accident benefit claims process. It is generally accepted that resort to interim payment orders is limited to cases of merit, need or urgency.
Arbitrator Alves in Coutu and Wawanesa Mutual Insurance Company (OIC A97-001916, June 5, 1998) at page 14, noted that: "this is a discretionary power to be exercised in appropriate circumstances, not granted routinely."
Arbitrator Allen in Harkness and Economical Mutual Insurance Company (OIC A96-001420, December 10, 1996) summarized the criteria for interim benefits applications:
...to consider limited issues on a prima facie basis: to affect a limited period of time-often the period between the date of the interlocutory and the final order; and to hear matters where time considerations are a factor. With applications for interim benefits, then, it is understandable why in the interest of speed and urgency the applicant is required to present only a prima facie case for entitlement and to show the urgent nature of the relief sought.
Although at least one arbitrator has opted for an enhanced level of proof in interim benefit matters, it is clear that an interim award is a summary matter to be dealt with on limited evidence (see Kolonjari and Co-operators, FSCO A97-002059, November 18, 1998).
To be entitled to an interim award of income replacement benefits, Mr. Charles must bring forward at least prima facie evidence that he meets the requirements for such benefits, and that there is some urgency connected to the receipt of those benefits.
Section 7(1) of the Schedule provides:
An insured person who sustains an impairment as a result of an accident is entitled to a weekly 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 two years of the accident, suffers a substantial inability to perform the essential tasks of that employment.
Mr. Charles, in his Notice of Motion and supporting affidavit, alleges that he meets the above criteria. He further alleges that "I believe that the present situation is urgent as I am in considerable need of ongoing funds."
The evidence in this motion for interim benefits, although presented before me, was in the form of affidavits served by Mr. Charles and his insurer, the Dominion of Canada General Insurance Group. Although Mr. Charles, the maker of the affidavit in support of the motion was present for the hearing, and available for cross-examination, no cross-examination took place. Jackie Lyons, the maker of the affidavit in support of Dominion's response, was not present at the hearing.
The factual underpinnings of this dispute are as follows:
Mr. Charles worked at two different types of employment at the time of his motor vehicle accident on June 21, 1995. He was employed by Kelly Temporary Services, working at Canadian Tire for some 39 hours per week.
In addition, Mr. Charles was subcontracted as a cleaner by True Quality Cleaners, to provide apartment building maintenance services. These services were apparently performed by Mr. Charles as an independent contractor, and of a heavier nature than his work at Canadian Tire.
Following the accident, Mr. Charles continued to work at Canadian Tire, but was unable to continue with the cleaning work. As a result, when he filed a claim for income replacement benefits, it related only to the cleaning service employment and did not refer to his ongoing Canadian Tire work.
As in most self-employment situations there were matters to be clarified by the Insurer. Dominion hired Forensic Accounting and Investigative Services, an accounting firm, to look into Mr. Charles' situation, but in the end it calculated and paid an IRB of $159.81 per week.
This was arrived at by taking his pre-accident income from the two jobs, and deducting his post-accident income from the remaining job at Canadian Tire.
Subsequently, in late 1997, Mr. Charles lost his secondary employment with Canadian Tire and "Kelly Girl". It is common ground that the termination of this employment was not due to the motor vehicle accident. He claimed an increase in his income replacement benefit due to the cessation of post-accident income.
Mr. Charles, in an effort to make up the lost earnings, began another small business, which was called Attinaj Antiuque. Mr. Charles' experience with this business resulted in a loss, a not unusual feature of a business start-up.
Notwithstanding the end of the Canadian Tire work, and the losses from the small business, Dominion continued to pay the income replacement benefit based on the 1997 calculations. Essentially, Dominion continued to deduct the post-accident income from Mr. Charles' benefit, even though it was no longer available to him.
The issues raised in Mr. Charles' motion are whether he should receive an interim income replacement benefit, and if so, at what amount. The Insurer also raises the issue of whether Mr. Charles was legitimately self-employed as a cleaner prior to the accident, since it claims that his contract had been terminated.
Evidence:
As noted, in accordance with the general practice on motions, evidence was tendered by way of affidavit, with documentary evidence appended by way of exhibits. This is appropriate, given the summary nature of an interim motion for benefits, and the need for an applicant to establish only prima facie evidence of entitlement.
Prima facie evidence can be the establishment of a fact in the absence of evidence to the contrary (R. v. Proudlock [1979] 1 S.C.R.).
Black's Law Dictionary (West Publishing Company, St. Paul, Minn., 1968) defines a prima facie case as "a case which has proceeded upon sufficient proof to that stage where it will support finding, if evidence to the contrary is disregarded." Jurisprudence at the Commission has approved of this approach (see Cripps and Axa Insurance (Canada), OIC A-013360, August 8, 1997).
Mr. Charles' affidavit outlines his evidence with regard to qualification for income replacement benefits. He speaks of his accident, the resulting injuries, and his income and employment status, both before and after the accident. He outlines his experience with the dispute concerning the quantum of the benefits he is owed, and appends as exhibits documents that were provided to him by the Insurer and others relating to these matters. He also states that he is in need of funds and that there is some urgency to the application. All of the matters deposed to were within his knowledge and experience, and could legitimately form part of his testimony if he were testifying viva voce in a court or arbitration.
If Mr. Charles' assertions are credible, then he will have made out the bare bones for qualification for an interim income benefit award as set out in the legislation.
The response of Dominion is contained in the affidavit of Jackie Lyons, an adjuster with the Company in its Scarborough office. Although Ms. Lyons had no contact with the file prior to 1999, she provides a history of the claims process. While the first few paragraphs clearly state that the information she is referring to is culled from past files, paragraphs 8, 11, 12, 14, 15, 16, 18, 19, and 21 all either begin with the phrase "I verily believe" or have no attribution as to the source of the assertions contained therein.
While affidavits may well be a necessary part of the motion process, and indeed, arbitrators are granted a wide discretion as to the admission of evidence, there are some restrictions as to what can be considered as probative evidence.
The courts have long recognized difficulties with affidavit evidence. In Re J. L. Young Manufacturing Co. Ltd. v. J.L. Young Manufacturing Co. Ltd. [1900] 2Ch. 753, Lord Alverstone C.J. stated at p. 754:
In my opinion so-called evidence on "information and belief" ought not to be looked , at all, not only unless the Court can ascertain the source of the information and belief, but unless the deponent's statement is corroborated by some one who speaks from his own knowledge. If such affidavits are made in the future, it is well that it should be understood that they are worthless and ought not be received as evidence in any shape whatever; and as soon as affidavits are drawn so as to avoid matters that are not evidence, the better it will be for the administration of justice.
In Ontario, Rule 39 of the Rules of Civil Procedure allows evidence on motions to be tendered by affidavit. Rule 39.01 (4) specifically provides that affidavits of information and belief may only be used if "the source of the information and the fact of the belief are specified in the affidavit."
Although the Practice Code at the Commission does not deal specifically with the content of affidavits, it is clear to me that, to have any probative value, they must meet at least the basic requirement set by White J. in Henry & Co. (Trustee of) v. Thorne Ridell [1984] O.J. No. 532 H.C.J. at page 5: "that the deponent state the basic facts from which the reader of the affidavit can find support for the belief, or the opinion, of the maker of the affidavit."
The thrust of Jackie Lyons' affidavit is that Mr. Charles was not "employed" as a cleaner at the time of the motor vehicle accident, that a certain interpretation should be made of the Schedule to either exclude the Canadian Tire income from the calculation of a net IRB or to allow the continued deduction of the same income, notwithstanding that it had ended, that Mr. Charles delayed in providing information, and his application for interim benefits lacked the necessary urgency. With the possible exception of the delays in providing information, none of these assertions appears in a form that would permit a reader to "find support for the belief, or the opinion of the maker of the affidavit." (Henry & Co. v. Thorne Ridell, supra).
I find that, although Ms. Lyons' affidavit puts forward the theories and the submissions of the Insurer, it is of little probative value as evidence and does not provide an evidentiary foundation for the Insurer's case.
Mr. Charles asserts that he was self-employed as a cleaner at the time of his accident. In corroboration of his testimony, he submits the "definitive report" on income replacement benefits prepared by the Insurer's forensic accountants. The report states that FAIS (the forensic accountants retained by the Insurer) interviewed the proprietors of TQC, the cleaning contractor and concluded:
The relationship between the Insured and TQC Inc. was acrimonious at best. Mr. Charles was the source of a number of problems at the 46 Panorama Court work site and they were in the process of terminating his services when the Motor Vehicle Accident occurred. It is unclear whether he was let go immediately before or after the accident while the Insured seemed to think it was after. Notwithstanding the above, it is highly unlikely that TQC Inc. is in any way colluding with the Insured in this matter. They were very co-operative and went to great lengths to try and locate Mr. Charles' company file.
Section 5 of the Schedule provides:
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.
Mr. Charles has argued that the condition of being self-employed involves holding one's self out as ready to accept work from one or more sources. The termination of any one of those sources of work does not affect the basic self-employment status, as long as he continues to hold himself available to take on such further tasks.
Section 268.3 of the Insurance Act permits the Commissioner to issue guidelines for the interpretation of matters covered by the Schedule. The Commissioner’s Guideline for Identifying Self-employed Individuals (4/96) states:
For the purposes of the SABs, an individual is considered to be self-employed if the business he or she derives his or her remuneration from is not incorporated under any law.
The guideline goes on to set out further indications of self-employment. Under this heading it includes the Contract of Service situation, and includes an individual who "has contract work with no long-term or permanent relationship to a specific purchaser." The section goes on to enumerate characteristics which echo those outlined in investigations contained in the Insurer’s accountant's report attached as Exhibit "A" to Mr. Charles' affidavit. And concludes by offering as an example of self-employment independent cleaners. For the Commissioner, at least, self-employment status is not dependent on the continuance of the same contract of service.
Notwithstanding Ms. Lyons' own interpretation of the employment provisions of the Schedule, I find that the evidence provided by Mr. Charles in his affidavit, if believed, could and likely would lead to a conclusion that he remained self-employed at the time of his motor vehicle accident.
Mr. Charles has stated that he was injured in the accident and was unable to continue with his cleaning work due to those injuries. Likewise, the Insurer’s own accountants appear to agree with Mr. Charles that he had legitimate income arising from his cleaning contract, and that this income ceased after the accident.
I find, therefore, that Mr. Charles has presented prima facie evidence that he was entitled to income replacement benefits arising from his inability to continue with cleaning work following the accident. I also accept Mr. Charles' evidence of urgency. I do not accept Ms. Lyons' suggestion that the payment of income replacement benefits of $185.00 per week necessarily removes all financial urgency or necessity for Mr. Charles.
I find, as well, that Mr. Charles has presented the requisite prima facie evidence to qualify for an interim benefit award. I further find that there is no probative evidence contained in the responding affidavit of the Insurer that would cause me to discredit Mr. Charles' affidavit evidence. He will therefore have his requested order for interim benefits.
The question of the quantum of the benefits remains to be decided.
Both parties made interesting arguments about the appropriate calculation of IRBs in Mr. Charles' case. Mr. Charles claimed that his income replacement benefit should be calculated to include both income streams, prior to the accident, with no deduction for post-accident income once the Canadian Tire income ceased. The Insurer wants to continue to make the post-accident deduction, even though the Canadian Tire work has ceased and the income is no longer available to Mr. Charles.
Although parties have made submissions concerning the most appropriate manner of calculating Mr. Charles' ultimate income replacement benefits, I find that an interim benefits hearing is not an appropriate forum to determine such an issue. Rather, I intend to leave any conclusions on that issue to the hearing arbitrator, based on the availability of more complete evidence. I am certainly not willing to make such a finding on the basis of affidavit evidence, with its inherent evidentiary weaknesses.
An interim benefit is meant to address a current need, not to resolve, once and for all, the questions of entitlement to and quantum of benefits, which are the subject of this arbitration. I propose instead to exercise my discretion to deal with the interim quantum in a fair and equitable way, that is in keeping with the summary nature of these proceedings.
Arbitrator Bayefsky in Kolonjari and Co-operators (supra) at page 13 confirmed the scope of an interim benefit application:
In my view, an order of interim benefits is designed to address the personal situation of the applicant in light of a preliminary determination of the merits of the case. It does not set in motion any process with respect to ongoing benefits, particularly when the nature and scope of such benefits can only be determined after a full arbitration hearing.
The parties will have the opportunity at the arbitration hearing to make full submissions on the implications of Mr. Charles' post-accident employment and self-employment, as well as on any question of mitigation, on any benefit payments. Such are clearly outside the parameters of an interim benefit hearing.
Eberhard J., in Gill v. Zurich, 1999 CanLII 36826 (ON SC), [1999] O.J. No. 4333 at p.14, made the following comments on the purposes of the statutory accident benefit scheme:
I adopt the statement of purpose articulated by Arbitrator Mackintosh at page 12 in Edgar v. Wellington Insurance Co. [1994] O.I.C.D. No. 34 File A-005441 that SABS is remedial, that is to be interpreted in a broad and liberal way, and that its principal object is to provide a "fair and adequate income stream to those who are injured and disabled from work". The victim is to receive an approximation of wages, and not be compensated more or less.
Without pre-judging the benefit calculation issue, I accept Mr. Charles assertion that the benefit should be related to the income stream arising from his cleaning activities. As Eberhard J. remarked in Gill v. Zurich, at page 7; "to the untrained eye, it appears that benefits should be payable to replace the income (s)he no longer received through employment."
Prior to the accident, Mr. Charles could supplement his Canadian Tire income with the amounts received from his cleaning work. After his accident he could no longer do such strenuous work. To not base compensation on this loss would deprive him of a fair approximation of wages lost due to the accident, and defeat the aims of the accident benefit system.
I note, parenthetically, in the context of the interim award, that while the Schedule clearly allows deductions of post-accident income, I am unable to find any support in the materials filed for the Insurer's position that it may deduct income that was neither available nor received post-accident from any income replacement benefit payable to Mr. Charles.
Consequently, I find, for the purposes of the interim benefit, that Dominion should pay Mr. Charles on the basis of the lost cleaning income, which the Insurer's accountants identified in Exhibit "B" to Mr. Charles' affidavit as $15,502.63 per annum. There shall be no deduction or adjustment from the IRB amount for deemed employment income.
Using the net weekly tables for the period, as published by the then Ontario Insurance Commission, gives a weekly net income of $240.75 with a net benefit in accordance with subsection 10(1) of the Schedule of $216.68. Dominion shall pay this amount as an interim weekly benefit to Mr. Charles, subject to a credit for any ongoing weekly income benefit currently being paid to Mr. Charles.
Since notice of Mr. Charles' interim benefits claim was given as part of the pre-hearing on October 24, 2000, I find that it is appropriate that the interim benefit should be retroactive to that date.
Special Award:
Although arbitrators have held that it is both proper and appropriate to order a special award on a preliminary or interlocutory matter, it is clear that the practice has not become generalized. This case, as well, is one where a special award is not required at this stage. Although some aspects of the handling of this case by the Insurer are unsettling, I find that interim income replacement benefits were not unreasonably withheld. Dominion did pay benefits, albeit not to the satisfaction of Mr. Charles. It allowed its representatives and accountants to unilaterally read provisions into the Schedule in an attempt to reduce its liability to Mr. Charles, but still it paid benefits.
Insurers are to be expected to deal fairly and honourably with their insured, but they are not to be held to a standard of absolute perfection. Given its track record in paying a disputed amount over a considerable time, and the real issues raised by the differing approaches to the calculation of quantum, I cannot find that Dominion unreasonably withheld benefits. Mr. Charles, consequentially, is not entitled to a special award.
Expenses:
The question of expenses was deferred until all other issues in this motion were decided. Therefore, the issue of Mr. Charles' expenses of this motion may now be addressed.
March 7, 2001
John Wilson Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 32
FSCO A00-000572
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ALFRED CHARLES
Applicant
and
DOMINION OF CANADA GENERAL 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:
Dominion shall pay Mr. Charles interim benefits.
The issue of expenses may now be spoken to.
March 7, 2001
John Wilson Arbitrator
Date
Footnotes
- The 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.