Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 89

Appeal P99-00062

Appellant Respondent by Cross-Appeal

and

Respondent Appellant by Cross-Appeal

Before:

Stewart M. McMahon, Director's Delegate

Counsel:

Andrew R. Kerr (for Mr. Desroches)

Gordon L. Robson (for Economical)

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal by Economical is allowed in part. Paragraph 1 of the order of November 10, 1999 is revoked and replaced with the following:

Mr. Desroches is entitled to a weekly loss of earning capacity benefit of $358.10.

The appeal by Mr. Desroches is dismissed.
Mr. Desroches is entitled to one half of his expenses of the combined appeals.

June 7, 2002

Stewart M. McMahon

Director's Delegate

Date

This appeal involves a number of issues. The most significant relates to the calculation of Mr. Desroches's loss of earning capacity benefits ("LECBs"). Both Mr. Desroches's pre-accident earning capacity ("PEC") and his residual earning capacity ("REC") were in issue at the arbitration. Each party has challenged the arbitrator's decision. Mr. Desroches submits the arbitrator undervalued his PEC. In contrast, Economical submits he overestimated it. Economical also challenges the arbitrator's conclusion that Mr. Desroches has no residual earning capacity.

In addition, Mr. Desroches appeals the dismissal of his claim for the labour costs necessary to complete the family home, and the dismissal of his claim for various home maintenance expenses. Economical appeals from those home maintenance expenses that were allowed.

Both parties approached the appeal as though questions of fact and law were reviewable. However, the amendments to s. 283(1) of the Insurance Act R.S.O. 1990, c I.8, proclaimed on November 1, 1996, limit appeals to questions of law. This change affects all appeals from arbitration proceedings commenced after November 1, 1996; see Henriques and Motor Vehicle Accident Claims Fund, (FSCO P97-00002, August 21, 1997). As Mr. Desroches's Applications for Arbitration postdate November 1, 1996, this appeal is limited to questions of law.

Did the Arbitrator err in the determination of Mr. Desroches's loss of earning capacity benefit?

Loss of earning capacity benefits are paid instead of income replacement benefits ("IRB"s) in the event the insured person continues to qualify for IRBs beyond 104 weeks. As the name suggests, LECBs are designed to compensate the insured person for reduced earning capacity. These benefits pay the insured person 90 per cent of the difference between his PEC and his REC[s.28(1)]. As both the PEC and REC are in issue, I will deal with each in turn.

A. Did the arbitrator err in his determination of Mr. Desroches's pre-accident earning capacity?

(i) background information

Mr. Desroches was 41 at the time of the accident. Prior to the accident he had worked as a self-employed stone mason and landscaper virtually his entire adult life. The arbitrator found that Mr. Desroches was well-suited for his trade and enjoyed it.

In 1981, Mr. Desroches purchased a house in Richmond Hill, a community just north of Toronto. He carried on business from his home, travelling around southern Ontario. He was generally paid on a contract basis, rather than by the hour. Mr. Desroches had a few employees over the years, and his wife helped him on occasion, but for the most part, he worked alone.

Mr. Desroches renovated the Richmond Hill house during the six or seven years that he and his family lived in it. In 1998, he moved his family to the Midland area, where he continued his business. Mr. Desroches had family and business contacts in the area. More importantly, he believed the area offered a better environment in which to raise his family. Mr. Desroches sold the Richmond Hill property for considerably more than the original purchase price. He used the proceeds, in part, to purchase two lots in a rural subdivision near Midland. He sold one of the lots and began to build the family's "dream home" on the other. The family was living in the partially finished home at the time of the accident. Mr. Desroches did much of the construction work on this home himself, however, his disability has prevented him from completing it. The family has continued to live in the house notwithstanding that it remains only partially complete.

(ii) the legislative context

The insured's PEC is calculated according to the criteria set out in s. 29 of the SABS.¹ Potential claimants are grouped according to the type of weekly benefit they receive. Income earners are sub-divided between those who are employees and those who are self-employed.

Determining an employee's PEC is relatively straightforward. It is calculated the same way as his income replacement benefit. In general, this means it will be based on his actual income.

Determining the PEC of self-employed persons may be more involved. Section 29(4)(a) provides that the PEC will not be lower that the insured's earnings over any consecutive 52-week period in the three years preceding the accident. However, this group is not limited to their actual earnings. Instead, their PEC is based on a notional income defined by what they "could reasonably have earned at the time of the accident, having regard to [their] personal and vocational characteristics at that time."[s. 29(2)]

These personal and vocational characteristics are defined in section 1. The list includes employment history, but also includes: education and training, vocational interests and aptitudes, vocational skills, and physical, cognitive and language abilities.

Although the inquiry mandated by s. 29(2) is not limited to a calculation of pre-accident earnings, Director's Delegate Makepeace indicated in Ironside and Royal Insurance Company of Canada (FSCO P99-00011, November 30, 1999) that it is limited by the following three factors:

First, the PEC is based on gross annual income that the person "could reasonably have earned." I agree with Royal that "reasonably" qualifies "could." The PEC cannot be based on mere possibility or speculation. Secondly, what is reasonable is to be determined "having regard to the person's personal and vocational characteristics." These are defined to include subjective factors (vocational interests) as well as a number of objective factors (employment history, education and training, vocational skills and abilities). Finally, pre-accident earning capacity is to be assessed as "at the time of the accident." As Arbitrator Allen said in Lehman, s. 29 mandates a retrospective enquiry "beginning a reasonable period before the accident and ending at the accident."

With respect to the last factor, how far back the trier of fact should look, will depend on the circumstances.

In addition, any analysis of a person's PEC, must take account of the following warning expressed by Director's Delegate Draper in GAN Canada Insurance Company and Lehman (FSCO P97-00064, August 10, 1998);

While the issue is the person's earning capacity...it cannot be capacity in the broadest sense. That would be inconsistent with the treatment of those who were employed at the time of their accident. However, I do not accept [the insurer's] arguments which seem to suggest that only Mr. Lehman's pre-accident earnings should be considered. That is not what the legislation says. The determination of pre-accident earning capacity under section 29(3) requires a realistic assessment of the insured person's earning capacity at the time of the accident.

(iii) the evidence at arbitration

In the fall of 1995, Economical asked its accountants, Ernst and Young, to calculate Mr. Desroches's PEC. Based on Mrs. Desroches's advice that her husband's last year was better than the preceding two, they calculated his PEC on the same basis as they had calculated his IRB. They did not assess his personal and vocational characteristics to ascertain if the PEC should be adjusted to reflect what he "could reasonably have earned." They calculated Mr. Desroches 's PEC to be $364.70 per week.

In the spring of 1996, Economical commissioned a labour market survey from Crawford and Company ("Crawford"). The survey reported the hourly rates paid by local stone-masonry firms. The survey did not provide any information concerning the earnings of self-employed stone masons. Ernst and Young subsequently updated their report, but they did not incorporate the findings of the Crawford survey.

In the spring of 1998, Mr. Desroches retained an accountant, Mr. Ronald Mix, to calculate his PEC. Mr. Mix reviewed Mr. Desroches's earnings from the stone-masonry business for the three years preceding the accident. This part of his calculations are similar to the findings of Ernst and Young. However, Mr. Mix also suggested that Mr. Desroches was in the business of developing and selling property. He included the profit on the sale of the Richmond Hill property and the vacant lot, and a notional profit premised on the value added to the property on which Mr. Desroches was building the family home. Mr. Mix suggested that these additional earnings raised Mr. Desroches's PEC to $533 per week. This was later revised downward to $503 per week.

Shortly before the hearing, Mr. Desroches retained Mr. Joel Kumove to prepare an LECB report. Mr Kumove's report included a survey of the earnings of both employed and self-employed stone masons. He reported that employees earned in the range of $50,000 to $70,000 per annum, and that self-employed stone masons earned between $110,000 to $150,000 per annum. In contrast, the accountants both suggested that Mr. Desroches had grossed about $25,000 in the year preceding the accident.

Mr. Desroches also presented the arbitrator with financial statements and tax returns going back approximately six years pre-accident. In some of the earlier years, Mr. Desroches did better than in the years immediately preceding the accident. His best year appears to have been 1986, when he grossed approximately $66,000.

At the arbitration hearing, Economical argued that Mr. Desroches 's PEC should be based on the Ernst and Young report. However, it also conceded that pursuant to s. 29(2), a consideration of Mr. Desroches 's PEC had to include an assessment of what he was "reasonably capable of earning." Mr. Desroches argued that he was entitled to the statutory maximum of $1,000 per week.

(iv) the arbitrator's reasons and the arguments on appeal

The arbitrator rejected Mr. Desroches 's argument that the determination of his PEC should include the profit generated on the sale of his Richmond Hill home and the vacant lot. The arbitrator also rej ected any inclusion of a notional profit related to the work done on the family home in Midland. Because the loss of earning capacity benefit is concerned with lost employment capacity, the arbitrator asked himself if Mr. Desroches was in the business of buying and developing land. He concluded that he was not. I see no error in the arbitrator's reasoning.

The arbitrator rejected Economical 's submission that Mr. Desroches 's PEC should be fixed by reference to what he had made in the year preceding the accident. He stated that "Mr. Desroches 's actual past earnings are an important, but not conclusive, piece of evidence as to what he could reasonably have earned at the time of this accident." This statement of principle is in keeping with Ironside and Royal Insurance Company of Canada, supra, and with GAN Canada Insurance Company and Lehman, supra.

Mr. Desroches argued that as an experienced stonemason he was "reasonably capable of earning" an income in line with the high end of the range reported by Mr. Kumove for self-employed stonemasons. The arbitrator rejected this proposition. He found Mr. Kumove's figures unreliable and based his decision on the information provided by Crawford and Company. Mr. Desroches challenges this decision. The arbitrator is responsible for weighing competing opinions and thereafter making a finding of fact. There is very little room to interfere with such a finding on an appeal restricted to questions of law. I see no error in the arbitrator's approach that could justify interfering with his finding.

However, using Crawford's figures to assess what a self-employed stonemason could reasonably have earned, presented the arbitrator with a number of challenges. The firms surveyed provided hourly rates, but did not indicate how many hours of work were typical, or the range of annual income a stonemason could expect to earn. Nor is it clear if the hourly rate relates only to paid employees, or was also the basis on which self-employed stonemasons prepared job estimates. Finally, the survey did not provide any information about what expenses a self-employed stone mason would typically incur. In sum, the arbitrator had very little reliable information on which to decide what a self-employed stonemason could reasonably have earned. He had a little more information concerning employees, but the information was far from complete.

In light of the limits of the available evidence, the arbitrator attempted to ascertain what Mr. Desroches could have earned as an employee. The arbitrator selected a mid-point from the survey of hourly rates, and multiplied it by 40 hours per week, 52 weeks per year to obtain an annual salary. The arbitrator then reduced this figure by 35 per cent for "contingencies."

These contingencies were based on findings that the work was seasonal in nature, work was not always available even during the usual work season, and Mr. Desroches would have taken some time away from paying jobs to work on his home. The arbitrator stated "that only by taking into consideration these factors can effect be given to the statutory words 'could reasonably have earned.'" This analysis resulted in a PEC of $543.19.

Economical notes on appeal, that even with the reductions, the PEC assigned by the arbitrator significantly exceeds the net income reported by Mr. Desroches in the preceding four or five years. It argues that the arbitrator erred by giving the phrase "could reasonably have earned at the time of the accident " far too broad a meaning, that led him to conduct a largely academic inquiry into pure potential, rather than an inquiry based on Mr. Desroches 's individual circumstances.

I have some sympathy for this submission, however, I am not persuaded that there is any basis for interfering with the arbitrator's decision.

If the insured has a significant work history, care must be taken before assigning a PEC that exceeds the insured's historical earnings. In particular, the arbitrator should examine whether other personal and vocational characteristics, such as placing a premium on leisure or family time, or diverting time from work to focus on private projects, have diminished the earning capacity one would expect, if only education, training, skills and abilities, are considered. However, ultimately, the decision to depart from the insured's historical earnings is a question of fact. Other arbitrators may have concluded that Mr. Desroches's historical earnings were the best evidence of his pre-accident capacity, but that does not make the finding reviewable. Provided the arbitrator turns his mind to the appropriate questions and considers the relevant evidence, there is little room for interfering.

I am satisfied that the arbitrator turned his mind to all of Mr. Desroches's personal and vocational characteristics. I am also satisfied that he asked himself how those characteristics might have affected his earning capacity in both a negative and positive sense. He made note of the fact that Mr. Desroches had moved his family to the Midland area for a more family-oriented lifestyle. He also indicated that one of the "contingencies" that caused him to reduce the annual income by 35 per cent was the fact that Mr. Desroches probably gave up some income to work on his home.

If only Mr. Desroches's years of experience were considered, one would have expected the arbitrator to assign a PEC based on the high end of the range reported by Crawford and Company. The mere fact that the arbitrator started with the midpoint, suggests to me that he was not undertaking an assessment of capacity in the broadest sense, but was trying to tailor it to Mr. Desroches's individual circumstances. It also suggests that he was attempting to take account of the fact he was using figures for employees to approximate the after-expenses earnings of a self-employed person.

In addition, the PEC appears to be less out of line with Mr. Desroches's historical earnings if a longer perspective is used. As noted earlier, Mr. Desroches appears to have earned considerably more money in the late 1980s, and early 1990s. This would appear to be consistent with evidence that the stone-masonry business had been suffering for a number of years.

Finally, the arbitrator found the net income reported by Mr. Desroches did not match his true "take home" income. There does not appear to be any evidence to suggest that he under-reported his revenues. However, a review of the evidence suggests that Mr. Desroches's accountant aggressively reduced Mr. Desroches's gross income, when there were relatively few hard expenses. This resulted in an under-reporting of Mr. Desroches's true net income. Consequently, the gap between Mr. Desroches "capacity" and his earned income is not as great as appears.

In conclusion, I see no basis for interfering with the arbitrator's ruling on this issue.

B. Did the arbitrator err in the assessment of Mr. Desroches's residual earning capacity?

(i) the legislative context

The legislation is important in two contexts. One, it provides the criteria for assessing residual earning capacity. Two, it establishes a process in the event the parties cannot agree on the REC.

The criteria for determining the REC are set out in s.30 of the SABS, which reads as follows.

30 (1) For the purpose of this Part, the residual earning capacity of a person shall be deemed to be the net weekly income determined in accordance with section 81 or 82 using the gross annual income that the person could earn from the type of employment that best satisfies the criteria set out in subsection (2).

(2) The criteria referred to in subsection (1) are:

The person,

i. is able and qualified to perform the essential tasks of the employment, or

ii. would be able and qualified to perform the essential tasks of the employment if the person had not refused to obtain treatment or participate in rehabilitation that was reasonable, available and necessary to permit the person to engage in the employment.

The employment exists in the area in which the person lives and is accessible to the person.
It would be reasonable to expect the person to engage in the employment having regard to the possibility of deterioration in the person's impairment and to the person's personal and vocational characteristics.

For the purposes of this appeal, s. 30 can be reduced to the following statement: Mr. Desroches's residual earning capacity, if any, must be based on employment that he is capable of performing, that exists in the area where he lives, and that is suitable for him in light of his personal and vocational characteristics.

The process for the transition from IRBs to LECBs is initiated by the insurer's "offer." Section 21 stipulates that the insurer must make such an offer promptly in the event the insured continues to qualify for an IRB 104 weeks after the onset of disability. By its very nature, this offer will require the insurer to assess both the insured's PEC and REC. In the event the insured person rejects the REC portion of the offer, the insurer must arrange for an assessment at a Residual Earning Capacity Designated Assessment Centre ("REC DAC") [s. 23(2)]. In addition, either party may file an Application for Mediation, but no further steps can be taken until the release of the report [s. 23(4)]. In the interim, the insurer must continue to pay IRBs. See Gan Insurance Company and Rocca, (FSCO P99-00003, July 20, 1999). When the REC DAC report is released, the insurer may stop paying IRBs and replace it with an LECB, based on the REC DAC's assessment of the REC [s. 23(5) and (5.1)].

(ii) the evidence at arbitration

In anticipation of making an LECB offer, Economical arranged for vocational assessments by two rehabilitation consultants. The reports, which were filed at the arbitration hearing, identified a number of prospective jobs.

Economical also arranged for two job trials. One was at a sewage treatment plant, the other at a conservation area. Mr. Desroches declined to participate in the trial at the conservation area on the basis that he was not capable of performing the tasks assigned to him. He attended at the sewage treatment centre briefly, but complained that vibrations in the plant floor exacerbated his neck pain. He also complained that the work was demeaning.

In addition, Economical arranged a REC DAC after Mr. Desroches rejected its offer. The arbitrator was provided with a copy of the REC DAC report, as supplemented by the testimony of the DAC's medical director.

The psycho-vocational portion of the REC DAC assessment generated 10 occupations, including labourer and machine operator, sales and service representative and clerk. This list was generated on the basis of psycho-vocational testing only, with no consideration for physical limitations. Simulations were then arranged for the following occupations: dispatch clerk, grain receiver, coding clerk, retail sales/counter clerk, and house detective. The assessors reported that Mr. Desroches met the physical and cognitive demands of: grain receiver, coding clerk and retail sales/counter clerk. They determined that he did not meet the physical demands of a house detective, and that they could not determine his ability to work as a dispatch clerk. Because Mr. Desroches's abilities fluctuated, they concluded a sedentary job was the most suitable, and therefore selected the coding clerk category as the basis for assessing his REC.

At the hearing, Economical did not press the jobs identified by its own experts, instead it conceded that the LECB should be based on the report generated by the REC DAC. However, Mr. Desroches asserted that he was incapable of any form of gainful employment and that accordingly he had no residual earning capacity.

(iii) the arbitrtor's reasons and the arguments on appeal

The arbitrator rejected Mr. Desroches 's assertion that he was totally disabled. However, he also rejected the REC DAC's conclusion that Mr. Desroches could work fulltime. The arbitrator accepted the opinion of Mr. Desroches 's doctor, who testified that he was capable of working half-time at a sedentary or light physical job, provided that a flexible employer could be found who would be willing to accommodate the variable nature of his symptoms.

Economical challenges this finding. It points to evidence which suggests Mr. Desroches was capable of more than he portrayed. Economical also points to various comments regarding Mr. Desroches's lack of motivation. The arbitrator's reasons show an appreciation of both these points. The Insurer's complaint is with the weighing of this evidence rather than with an error of law.

The arbitrator stated that in his opinion an arbitrator assessing an insured's REC is not limited to either full-time work or a zero REC. However, despite this statement, and his previous finding that Mr. Desroches was capable of part-time work, he went on the conclude that Mr. Desroches had no residual earning capacity. He did so principally because he was not satisfied that the occupation selected by the REC DAC — coding clerk — was either available or suitable. Nor was he satisfied that any of the other jobs identified by the rehabilitation consultants retained by Economical, were suitable. In the absence of any evidence of employment that met the criteria set out in s.30, the arbitrator concluded that the appropriate disposition of the matter was a finding that Mr. Desroches had no residual earning capacity. Economical appeals this ruling.

Underlying this ruling is the assumption that the Insurer has the onus of establishing the level of the insured person's REC and if it fails to meet this burden, the REC should be set at zero. This assumption was clearly enunciated by the arbitrator in a subsequent decision; E.H. and Wawanesa Mutual Insurance Company (FSCO A00-000154, July 13, 2001), in which he states:

I agree with the Applicant's submissions that the legal onus is not on applicants, many of whom have little or no financial resources, to prove a negative, that is, the non-existence of alternative reasonable employment. One would normally expect that the expertise necessary to determine a REC would result in a significantly greater expense than that required to determine whether one is disabled from the essential tasks of one's pre-accident employment.

Hence, I find that an insurer is relieved, in part or in whole, of its responsibility to pay LEC weekly benefits only to the extent that it can establish, on a balance of probabilities, the availability of suitable post-accident employment.

With respect for the arbitrator's careful consideration of this issue, I find myself disagreeing with his reasoning, which represents a distinct departure from the well-established principle that the insured person has the onus of establishing his entitlement to benefits.

A claim for LECBs is more complicated than most, but in the final analysis it is no different than any other claim. The insured person does not simply come to the hearing asking the arbitrator to award him an LECB. He comes to the hearing seeking an order that he is entitled to a specific amount of money per week that is based on his own assessment of his PEC and REC. In this case he demanded the statutory maximum of $1,000 per week. Inevitably, the insurer will present an opposing position. The arbitrator is called on to choose one position or the other, or to try and craft some alternative, that will almost invariably fall between the opposing positions.

With respect to the REC issue, Mr. Desroches chose to take the extreme position of no residual earning capacity. This position was open to him, as it is open to any insured person, but the risks inherent in this position are high. If he is unable to persuade the arbitrator that he is totally disabled he will probably not be in a position to offer any other alternative to the evidence offered by the insurer. In such cases, the chance that the ultimate finding will be a zero REC will be remote.

One of the main justifications noted by the arbitrator for imposing the onus on the insurer, is an imbalance in resources. I am sympathetic to the arbitrator's concerns about the cost of an assessment. However, to my mind this concern is largely addressed by the scheme set out in s. 23 of the SABS. The insurer is obliged to make the initial offer. This will usually involve some form of vocational assessment paid for by the insurer. If the insured person disagrees with the insurer's assessment, s.23(2), provides that the insurer must arrange for and fund a REC DAC assessment. It is only if the insured person disagrees with this independent assessment that he will have to bear the expense of his own vocational assessment. In an adversarial system, it is inevitable that at some point in time, the insured person will have to incur expenses if he intends to pursue his claim. In addition, the Commission's approach to reimbursing the insured person for such expenses has recognized the inherent imbalance in the parties' abilities to bear these expenses, and has attempted to redress it by commonly awarding the insured person his expenses even in the event that he is unsuccessful.

Leaving the onus on the insured person does not mean that he must prove a negative. This issue has been canvassed on a number of occasions in regard to the onus of proving entitlement to post-156 week benefits, where the threshold is a disability that continuously prevents the insured from engaging in any occupation or employment for which he is suited. In Canadian Surety Company and H.K. (FSCO P98-00041, February 29, 2000) Director's Delegate Naylor reviewed a number of arbitral decisions and a frequently cited Manitoba Court of Appeal decision, Campbell v. Canada Life Assurance Co. (1990), 45 C.C.L.I. 79. She stated;

The appropriate approach is a flexible, fact-based one, in which, while the legal onus always remains on the insured, the sufficiency of the proof depends on what is reasonable in the circumstances. This involves consideration of the evidence presented by both parties, including the nature of the individual’s condition and extent of the disability, the efforts the insured has made to position himself or herself to return to the workforce, the vocational assistance made available by the insurer and the options for alternative work that have been put forward.

In this case, Economical went to considerable lengths to try and rehabilitate Mr. Desroches and to offer vocational options. The arbitrator was not prepared to go so far as to say that Mr. Desroches refused to participate in rehabilitation, and he noted that Mr. Desroches had reason to distrust Economical's agents, and that he had a genuine fear of aggravating his pain or further injuring himself. But he also noted that Mr. Desroches had shown little initiative or enthusiasm for returning to the workplace, and that his predominant response to the question of reintegrating into the workforce appears to have been to criticize Economical's efforts. When these circumstances are combined with the arbitrator's finding that Mr. Desroches was not totally disabled, Economical 's challenge to the arbitrator's decision to assign a zero REC is quite understandable. In addition to this general concern about reversing the onus, Economical also submitted that the arbitrator erred in his consideration of the employment selected by the REC DAC.

First, it argues the arbitrator erred when he stated that he was not prepared to assume, in the absence of supporting evidence, that the REC DAC had selected an occupation that existed in area where Mr. Desroches lived. However, Mr. Desroches's own lawyer commissioned a report which noted that coding clerk positions existed in the area. The arbitrator makes no mention of this evidence, which would have supported the REC DAC's selection of coding clerk as an appropriate occupation. Ignoring material evidence is a reviewable error. I agree that the arbitrator erred in rejecting the REC DAC's choice of occupation on the basis that it had not been proven that jobs existed in Mr. Desroches 's area.

Second, it argues that the arbitrator inappropriately rejected employment as a coding clerk on the basis that it was not suitable in light of Mr. Desroches's personal and vocational characteristics.

The question of the suitability of clerical work was posed to the REC DAC after the release of its report. The physiotherapist and psychologist authored a brief addendum that relied on a reference in the Minister's guideline dealing with insured person's "interests." The guideline states;

In considering the vocational characteristics, the claimant's 'interest' may represent some specific challenges in selecting an employment type. However, in the case where earning capacity is seriously diminished when the single variable of interest is factored in, interest would be weighted as less important and the employment type that maximizes earning capacity should be selected."

The arbitrator makes note of the DAC's reliance on the guideline, and then goes on to state; "I see no justification for [the DAC] failing to give any weight to Mr. Desroches 's personal and vocational characteristics. However, I further see no justification in section 30 of the Schedule for a guideline which seeks to 'maximize' earning capacity at the expense of 'personal and vocational characteristics.'"

In my view, the arbitrator is overstating the effect of the guideline. It does not suggest interest should be ignored. It states the variable should be weighted as "less important" in certain circumstances. To my mind, the intent of the guideline is to prevent an inappropriate skewing of a person's earning capacity in circumstances where a job might be rejected notwithstanding the person would be suited for it by reason of his work history, training, experience, aptitude, and other personal and vocational characteristics.

Diminishing the value of a single variable rather than ignoring it, leaves plenty of room for an individualized examination. In appropriate circumstances, it is still open to the REC DAC assessors or an arbitrator to reject an occupation on the basis of choice. See for example Lehman and Gan, supra where the arbitrator found a particular employment unsuitable because the insured had chosen to leave that line of work years before the accident.

It is true that psycho-vocational assessments indicated that Mr. Desroches was primarily interested in outdoor and "realistic" work, but the DAC also had the benefit of prior testing which suggested that he also had an interest in occupations with a social or enterprising theme. The occupations included in "coding clerk" are consistent with this profile. Mr. Desroches is no longer capable of his first choice, which involves heavy physical work. That does not automatically translate into a zero REC. The end result might have been very different if Mr. Desroches had offered an alternative, or at the very least, actively participated in a rehabilitation program designed to return him to a vocation of his choice. However, he did neither, leaving very little alternative.

However, there still remains the question of how to reflect the arbitrator's finding that Mr. Desroches could not work fulltime, and that he would face other barriers to employment. The arbitrator will often be faced with less than complete evidence, particularly where the insured person does not offer any alternative but a zero REC. In these circumstances the arbitrator has little alternative but to use his best judgement, relying on the criteria set out in s.30. In a footnote to the decision, the arbitrator undertook precisely this task, stating:

If I had approximated Mr. DesRoches' REC, I would have concluded that the income that Mr. DesRoches could reasonably earn would be $446.23 per week as a Coding Clerk, reduced by 50 per cent to account for his difficulty in maintaining this employment and further reduced by 30 per cent (against the remaining 50 per cent possible employment income) to account for his difficulty in obtaining such employment. This amounts to a total reduction of 65 per cent against the weekly sum of $446.23, which leaves $156.18 per week. Using the Commission tables, one arrives at a weekly REC of $145.30. Had Mr. DesRoches either been in or if there was a probable expectation that he would have entered a reasonable, available and necessary rehabilitation programme which would have decreased his concurrent ability to seek employment, I would have taken that into consideration as a personal and vocational characteristic in determining his REC.

In the circumstances, I think this is the appropriate disposition of the matter, and the arbitrator's ruling that Mr. Desroches has no residual earning capacity is rescinded and replaced with a ruling that his REC is $145.30 per week.

C. Conclusions on the LECB issue

Applying the formulae set out in s. 28(1) Mr. Desroches's LECB is calculated as follows:

0.90 X (PEC -REC) ---- 0.90 X (543.19-145.30) = $358.10

Mr. Desroches has been receiving $488.87 pursuant to the arbitrator's order. The difference is $130.77 per week. Economical was granted a partial stay of the arbitrator's order at the time the Notice of Appeal was filed, that permitted it to withhold a portion of the arrears pending the disposition of the appeal. The overpayment is to be subtracted from the amount withheld, with the difference, plus applicable interest,paid to Mr. Desroches.

Did the arbitrator err in his consideration of Mr. Desroches's demand that Economical fund the completion of his home?

As noted above, Mr. Desroches was doing much of the construction work on the family residence himself. He was unable to complete the construction due to the injuries sustained in the accident, and made a claim pursuant to s. 40 of the SABS, for the labour costs to complete the work.

Section 40 is found in Part VIII of the SABS, which is entitled "Rehabilitation Benefits." The arbitrator dismissed the claim on the basis that the benefits provided for in Part VIII are not "designed in the absence of some rehabilitative purpose to compensate for or replace functions once performed by the insured person." I agree with this statement, which is in keeping with a long line or arbitral decisions. See for example Zehr and The Guarantee Company of North America, (OIC A-001963, July 30, 1993). The key to any evaluation of a claim for benefits pursuant to s. 40 is whether the expense addresses a rehabilitation need?

Mr. Desroches argues that contrary to s. 6 of the 1990 version of the SABS,² s. 40 of the SABS-1994, is designed to be the basis for compensating any pecuniary loss, other than loss of income. Coupled with this submission, is the argument that because Bill 164 abolished the right to sue for pecuniary loss, all such claims must be payable pursuant to s. 40, unless they are clearly excluded. I reject this assertion. To argue that s. 40 is designed to compensate generally for all pecuniary losses, is to ignore the structure of the SABS. The SABS is not designed around a single entitlement section with a series of exceptions or exclusions surrounding it. Instead, it is made up of a series of much narrower benefit provisions, each of which is designed to address a particular need or group of needs. In the case of part VIII, it is designed to address rehabilitation needs.

There is no doubt that Mr. Desroches sustained a pecuniary loss by virtue of the fact that he will have to pay for labour that he would otherwise have been able to supply himself. I also agree that in light of the fact that Bill 164 abolished the right to sue for pecuniary loss, an adjudicator should examine the SABS carefully before concluding that the loss is not compensable. But I reject the notion that all such claims are recoverable unless they are clearly excluded. I do not believe that the type of claim asserted by Mr. Desroches can be claimed under s. 40.

Mr. Desroches 's appeal on this issue is dismissed.

Did the arbitrator err in his assessment of Mr. Desroches's entitlement to various home maintenance expenses?

Mr. Desroches submitted a claim for various expenses related to the maintenance of his home. These claims were submitted pursuant to s. 40. The arbitrator allowed some and dismissed others. He correctly noted that they should be considered under s. 55, which provides for the payment of additional expenses reasonably incurred for home maintenance expenses. It should be noted that these types of claims must be distinguished from the demand for the cost of labour to complete the home. See Harper and Liberty Mutual Insurance Company, (OIC A96-001257, December 19, 1997) which stands for the proposition that "maintenance is related to the upkeep, repair, preservation and modest enhancement of the home as it exists, not new construction or renovation."

The arbitrator was asked to consider various maintenance tasks such as fall clean-up and raking, driveway repairs, roof repairs and work in the attic. He commenced his deliberations by noting that Mr. Desroches relied on the evidence of his family doctor to advance these claims. He also noted the doctor stated Mr. Desroches would be hampered by symptoms relating to the accident, rather than stating Mr. Desroches was incapable of performing them. Based on this statement the arbitrator examined each task with a view to ascertaining if it was reasonable for Mr. Desroches to undertake the tasks given his symptoms. This is the correct approach. The arbitrator weighed the competing evidence and came to conclusions based on that assessment. I see no basis for interfering with the arbitrator's judgement.

The appeals on this issue are dismissed.

IV. EXPENSES

The initial Notice of Appeal was filed by Economical. After filing a Response to Appeal, Mr. Desroches sought leave to file his own Notice of Appeal which was not filed within the time prescribed by the Dispute Resolution Practice Code. The materials filed in support of the late filing include a statement that Mr. Desroches had not intended to appeal until he received Economical's Notice of Appeal. In this sense, Mr. Desroches's appeal is truly a cross-appeal that would not have existed but for Economical 's appeal.

Success on the appeals was divided. Economical was successful in having the ruling on residual earning capacity varied. Mr. Desroches was not successful with respect to the submission that the arbitrator undervalued his PEC, but he did successfully defend Economical 's attempt to reduce the PEC. Mr. Desroches was unsuccessful on the claim that Economical should pay the labour costs necessary to complete the family home. Neither party was successful on the home maintenance expenses.

In all of the circumstances, Mr. Desroches is entitled to one half of his expenses of the combined appeals.