Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 113

Appeal P02-00027

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Appellant

and

TEKEBASH BERHE

Respondent

Before:

Nancy Makepeace

Representatives:

Ian D. Kirby for State Farm

David R. Neill for Mrs. Berhe

Hearing Date:

April 29, 2003

APPEAL ORDER

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

The appeal is dismissed, and the arbitration order, dated September 9, 2002, is confirmed.
The parties shall bear their own appeal expenses.

July 24, 2003

Nancy Makepeace Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal is about the nature of the evidence required to prove dependency under the SABS-1996.¹ Mrs. Tekebash Berhe was the mother of Mr. Hailemariam Gebrehiwot Gebremeskel, who died as a result of a car accident on January 20, 2000. State Farm paid $6,000 for funeral costs under s. 26 of the SABS-1996, but refused Mrs. Berhe's claim for death benefits under s. 25. State Farm claims Mrs. Berhe has not proven that she was a dependant of her son, as defined in s. 2(6) of the SABS-1996. State Farm appeals from the Arbitrator's decision, dated September 9, 2002, awarding death benefits of $35,000 to Mrs. Berhe.

II. BACKGROUND

Section 25 requires the insurer to pay death benefits of $10,000 "to each of the insured person's dependants" and $25,000 to the insured person's spouse or same-sex partner; if the deceased did not have a spouse or partner, that sum also goes to his or her dependants. The SABS-1996 defines "dependant" in s. 2(6):

For the purpose of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person's spouse or same-sex partner.

There is no suggestion that Mrs. Berhe was dependent on Mr. Gebremeskel for care. Mrs. Berhe claims she was principally dependent on him for financial support. She lives in Ethiopia, and there is no real dispute that Mr. Gebremeskel, who had moved to Canada in the '80s, sent her money from time to time. The only issue is whether this support was sufficient to make her " principally dependent" on her son for financial support.

To establish her claim, Mrs. Berhe had to prove that she "chiefly or for the most part" derived her financial support from her son.² This is a question of fact to be decided on the evidence presented in each case. The Arbitrator set out the criteria, which are well-established, as follows:

The applicant must "chiefly" or "primarily" or "for the most part" derive his or her financial support from that person rather than from other sources.
The dependence must be financial and does not include other forms of dependence such as social dependence except when social factors relate to financial dependence.
Financial support includes the concept of "money's worth" or the reasonable value of goods and services provided and exchanged.
The determination of the nature and degree of dependency is essentially one of fact and requires an assessment of all of an applicant's particular circumstances at the time of the accident to determine whether the applicant was chiefly deriving their support from the other person.
The applicant's particular circumstances in their entirety must be assessed at the time of the accident. However, the applicant's position cannot be determined solely by a single snapshot of circumstances at that date.
Matters such as the amount and duration of the financial dependency, the financial or other means of the applicant, the ability of the applicant to be self-supporting (at the time of the accident) are appropriate considerations for determining the question of financial dependency.
While the ability to be self supporting is a relevant criterion of dependency, nothing in the Schedule suggests that this must be measured with reference to a subsistence-level of living.
The overriding principle governing interpretation of the dependency provisions is that the benefits legislation is remedial and as such should be accorded a broad and liberal interpretation that best meets its objectives.³

There were no witnesses at the arbitration hearing. Mrs. Berhe relied on documentary evidence: her statutory declaration, along with a supplementary explanation, a decision of an Ethiopian communal court, and her son's bank records. The Arbitrator accepted that Mrs. Berhe was principally dependent on Mr. Gebremeskel for financial support.

On appeal, State Farm submits that the Arbitrator erred in giving weight to the decision of the Ethiopian communal court. It argues that the evidence before the Arbitrator was insufficient to support her decision. Mrs. Berhe contends that State Farm's real dispute is with the Arbitrator's findings of fact, whereas appeals are restricted to questions of law.⁴ Alternatively, she submits that appellate review of an arbitrator's factual conclusions is limited to "palpable and overriding error," as described by the Supreme Court of Canada in Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.J. No. 31.

For the following reasons, I am not persuaded the Arbitrator made an error of law.

III. ANALYSIS

A. Mr. Gislasie's Failure to Testify

At the outset of the arbitration hearing, Mrs. Berhe's counsel announced that his only proposed witness could not attend because of illness. Mr. Teshome Gislasie was described as a friend of Mr. Gebremeskel who had, along with four others, a "power of agency" to look after his affairs in Ethiopia. As a result of Mr. Gislasie's absence, there were no witnesses at the hearing. In her closing statement, State Farm's counsel described Mr. Gislasie as "the driving force behind this application," and stated she had prepared to cross-examine him.⁵

The time to raise this concern was at the outset of the hearing, when Mrs. Berhe's counsel announced that Mr. Gislasie could not attend. At that time, State Farm's counsel could have asked the Arbitrator to draw an adverse inference, or requested an adjournment for the purpose of securing his attendance. No objection was made at that time. Moreover, the transcript indicates that State Farm's counsel did not make this argument in her closing submissions either, though she did argue, in general, that an adverse inference should be drawn from Mrs. Berhe's failure to provide the information State Farm requested. In these circumstances, I am not satisfied the Arbitrator erred in failing to draw an adverse inference from Mr. Gislasie's absence.

B. The Order of the Ethiopian Communal Court

In September 2000, a local court heard Mrs. Berhe's application for confirmation that she was dependent on her late son. The court heard from three witnesses – a priest, a government worker and a worker in a textile factory. They all gave the same evidence – that Mrs. Berhe lives in a rented house, for which she pays 150 Ethiopian Birr per month, that her late son supported her by sending her $250 Canadian every month, and that she is unemployed and has no other income. The court rendered its verdict accordingly:

Thus the decision: since the witnesses have testified that Mrs. Tekebash Berhe is a dependant of her son Hailemariam, living on the 250 Canadian dollars which he sends her monthly, that in the past as well as at the present she lives in a rental house for which she pays 150 Birr – Ethiopian currency a month, in general that she is a dependant of her son Hailemariam G/hiwet; we have unanimously decided that this decision to be conveyed to the concerned authority to be used as her evidence.⁶

The Arbitrator made the following comments about the decision:

I consider that the communal court in Ethiopia treated the question of dependancy as a very serious question and sought the testimony of various witnesses who gave evidence about their knowledge of Mrs. Berhe's dependancy on her son. While this was another forum that determined the question of dependancy, I believe that at the same time as I am required to weigh the evidence before me and ultimately decide the question, I am also obliged to treat a decision of the Ethiopian court with respect. While it is not determinative, the decision, taken together with Mrs. Berhe's affidavit and supplementary document in response to State Farm's request for further information comprise a body of evidence which satisfy me that Mrs. Berhe was financially dependant on her son.⁷

The Arbitrator heard no evidence about the court's definition of dependency or the nature of its process. Mrs. Berhe did not testify before the court, and the Arbitrator did not hear any explanation of this. It appears that three witnesses gave oral evidence, but nothing in the decision suggests they were cross-examined or their evidence otherwise tested. The decision raises a number of questions. Did the witnesses have an interest in the outcome? Did they have independent knowledge of Mrs. Berhe's circumstances, or was she the source of their information? Why did they all give exactly the same information? Why did they express Mr. Gebremeskel's contributions in Canadian funds, rather than Ethiopian Birr, with which they would have been more familiar? Why was rent the only expense mentioned by any of the witnesses? These are all questions that might have been put to them on cross-examination.

If the Arbitrator had relied on the doctrine of issue estoppel, I would have found this an error of law because I am not persuaded the proceeding of the Ethiopian court satisfied the pre-conditions for application of that doctrine.⁸ However, the parties agreed, on appeal, that this is not what she did. The issue is whether she gave the decision too much evidentiary weight. I will return to this question after considering the other evidence admitted at the arbitration hearing.

C. The Statutory Declaration

State Farm was not satisfied with the verdict of the Ethiopian court, and requested that Mrs. Berhe provide certain specific information by statutory declaration. She executed a statutory declaration stating:

she was the mother of the deceased
her address
she pays rent of $150 Ethiopian Birr per month
her son sent her "approximately" $250 per month "to assist me with my daily living expenses"
she is married and lives with her husband, who does not work
"occasionally," she received money from her other children, but she was "principally dependent" on the deceased for financial support

Mrs. Berhe's counsel in Canada arranged for her to execute a second declaration in response to State Farm's request for more information. As well as repeating the information given in the first statutory declaration, the second one stated:

the money was received "through Banks, letter, mails, and mostly through individuals"
the money was used "for family maintenance"
she lives with her husband and dependent children
she is married and "lives in bondage"⁹
she does not have any income
she and her husband are unemployed and therefore do not pay tax
she does not have copies of any bank statements because the bank would telephone her to come and collect the money
she received money from her son from 1988 until his death
this money was not taxed
she had some documents but "is confused where she put them"
the exchange rate for the Birr was 1 USD=8 Birr at that time

I agree with State Farm that Mrs. Berhe's statement that she received money, not only from her late son, but from her other children as well, warranted further enquiries in the context of the dependency test in the SABS. It also tends to undermine the verdict of the Ethiopian communal court, which stated that Mrs. Berhe had no other source of income apart from her late son. As well, State Farm submits that Mrs. Berhe's statutory declarations did not satisfy its request for her bank records or income tax records. The Arbitrator recited the declarations, but did not discuss their evidentiary strengths and weaknesses, except to say that Mrs. Berhe "made her best efforts to provide the information" State Farm requested.¹⁰

D. Bank Records

Mrs. Berhe relied on Mr. Gebremeskel's bank records from the Royal Bank between January 1998 and January 2000. They do not reflect regular monthly funds transfers or foreign exchange transactions, or indeed any regular payment of $250 per month. They do include two funds transfers to Mrs. Berhe – one for $538 on October 13, 1998, and one for $1,538 on October 25, 1999. There are also several foreign exchange transactions – $1,431.60 on March 9, 1998; $720.10 on March 30, 1998; $1,451.60 on May 11, 1998; $1,491 on June 22, 1998; $763.90 on April 9, 1999; and $150.10 on August 14, 1999 – but the bank statements do not indicate the currency involved or the reasons for the transaction. I accept State Farm's submission that a debit entry for $149.49 on December 21, 1999, represented a direct payment to a store, International Clothiers, rather than purchase of an international money order, as indicated by the Arbitrator.¹¹

The bank records leave a number of questions unanswered. They do not indicate whether the foreign exchange transactions were in Birr, or US dollars, or some other currency. The purpose of the transactions are not explained; were these funds sent only to Mrs. Berhe, or was Mr. Gebremeskel sending money overseas for other reasons? If Mrs. Berhe received funds in Birr from her son, why did the witnesses at the communal court express his contributions in Canadian dollars? Not one of these transactions was for $250 Canadian, nor do they average that amount.

The bank records also raise the "snapshot" issue: what is the time frame for assessing dependency? Even if all the foreign exchange transactions, as well as the transfers, recorded in Mr. Gebremeskel's bank records represented his contributions to his mother's support, it is inescapable that the bulk of the money was sent in 1998, when Mr. Gebremeskel's foreign exchange transactions and transfers totalled $5,632.30, or $469.36 per month on average. In 1999, the three transactions (one funds transfer and two foreign exchange transactions) totalled $2,452, for an average of $204.33 per month. Over the two years, the transactions averaged $336.85 per month. These figures do not approximate $250 per month.

E. Standard of Review

Pursuant to s. 283(1) of the Insurance Act, appeals are restricted to questions of law. Mrs. Berhe claims that State Farm's submissions invite me to second-guess the Arbitrator's factual findings, which are beyond appellate review.

Whether Mrs. Berhe was her son's "dependant" is a question of mixed fact and law because it depends on applying the dependency definition – a legal principle – to the facts of this case. The Arbitrator stated the correct legal principles,¹² but that is not the end of the matter. If her ultimate conclusion indicates she did not apply them, the decision is appealable.

State Farm does not allege that the Arbitrator disregarded relevant evidence or considered irrelevant evidence. Apart from the factual error with respect to the International Clothiers purchase of $150, which had little or no impact on the outcome, the Arbitrator is not alleged to have misapprehended significant pieces of evidence. State Farm's position is that the evidence did not support the Arbitrator's finding that Mrs. Berhe was "principally dependent" on her son.

This was a difficult case. Mrs. Berhe bore the onus of proving entitlement. The evidence she presented left a number of questions unanswered, and the Arbitrator's reasons did not specifically address all of State Farm's concerns. However, I am not satisfied the Arbitrator erred.

Reading the arbitration decision as a whole, the following passage seems especially important:

State Farm asked that I draw an adverse inference because of the lack of information provided about Mrs. Berhe's assets and financial obligations. I find that Mrs. Berhe made her best efforts to provide the information requested. In fact, she obtained a decision from an Ethiopian court and later, provided both an affidavit and a supplementary explanation in response to State Farm's request for information. In addition, all documents were translated from the Tigrinia language to English and notarized.¹³ [footnote omitted]

I understand this to mean that the Arbitrator believed she had the best evidence reasonably available in the circumstances. This was not the evidence that would have been available had Mrs. Berhe lived in Canada, but distance placed practical limits on the availability of oral evidence in this case, and cultural differences made Mrs. Berhe's declarations and the verdict of the local court difficult to interpret. These were legitimate considerations, in my view.

In this context, I am not persuaded the Arbitrator erred in her treatment of the verdict of the Ethiopian communal court. This was an official statement by a judicial authority in Mrs. Berhe's' community. Presumably, it reflected the confidence of the witnesses that Mrs. Berhe depended on her son, as she claimed. In the circumstances, it was likely the best evidence available, and I am not persuaded the Arbitrator erred in law by putting weight on it. Moreover, it was supported, in essence, by Mr. Gebremeskel's Canadian bank records, which establish that he was sending money to his mother, though they leave open the question how much. Although Mrs. Berhe admitted that some of her other children also sent her money, this is not inconsistent with her claim that her son was her main support. State Farm disagrees with the Arbitrator's weighing of the evidence, but this was within her authority. I am not satisfied the Arbitrator's conclusion resulted from an error in law.

IV. EXPENSES

Although State Farm did not succeed in its appeal, I do not find it appropriate to make an expenses order in Mrs. Berhe's favour because of the novelty of the issue and the legitimate questions raised by the Arbitrator's decision.