Neutral Citation: 2003 ONFSCDRS 31

FSCO A02-000906

BETWEEN:

ANJUM DAR

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

William J. Renahan

Heard:

January 6, 8 and 9, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Raj Napal, Barrister and Solicitor, for Ms. Dar

Mark L.J. Edwards for Allstate Insurance Company of Canada

The Applicant, Anjum Dar, was injured in a motor vehicle accident on September 26, 1999. She applied for statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ On October 26, 1999, Allstate advised Mrs. Dar that it had hired an accountant to calculate any income replacement benefit. From then to the date of this hearing, Allstate, or its representatives, have asked Mrs. Dar several times to provide accounting information. Allstate claims that Mrs. Dar did not provide sufficient documentation for Allstate to calculate any income replacement benefit.

As well, Allstate arranged for Dr. J. Kwok to assess Mrs. Dar on November 25, 1999. Dr. Kwok concluded that Mrs. Dar was not disabled from returning to her work or her pre-accident activities. Allstate advised Mrs. Dar that it would not pay income replacement benefits based on this opinion and advised her of her right to elect a disability assessment at a Designated Assessment Centre ("DAC").

On the first day of the hearing, Mrs. Dar produced a signed copy of her election for a disability assessment which is dated December 16, 1999. Although Mrs. Dar did not raise the issue of whether Allstate failed to arrange a disability DAC until the hearing, I considered that issue.

The parties were unable to resolve their disputes through mediation, and Mrs. Dar 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 Mrs. Dar entitled to income replacement benefits pursuant to section 4 of the Schedule after October 4, 1999, and if so, in what amount?
Is Mrs. Dar entitled to housekeeping expenses pursuant to section 22 of the Schedule after September 26, 1999?
Is Mrs. Dar entitled to a special award pursuant to subsection 282(10) of the Insurance Act?
Is either party entitled to expenses of the arbitration proceeding pursuant to subsection 282(11) of the Insurance Act?

Mrs. Dar is not entitled to income replacement benefits.
Mrs. Dar is not entitled to housekeeping expenses.
Mrs. Dar is not entitled to a special award.
The issue of entitlement to and amount of expenses of the arbitration proceeding is deferred.

Background:

Mrs. Dar is now 53 years old. She claims that she cannot return to work because of injuries she sustained in a motor vehicle accident on September 26, 1999.

She testified that her stationary vehicle was struck from the back and side by another vehicle around 11:00 a.m. She threw up blood and went to hospital by ambulance. She was released from hospital around 7:00 p.m. She continues to complain of pain in her right leg, arm and hand and jaw pain which radiates into the neck. She claims that she is most comfortable when standing. She has also complained to doctors of constant pain in her neck and trunk and headaches.

Mrs. Dar has worked on and off as an electrolysist, removing unwanted hair, for 20 years. At the time of the accident she had recently re-established her own business, Finesse Skin Care ("Finesse"). She also worked two or three days a week at Devlin Electrolysis ("Devlin").

The most remunerative part of her work at Finesse was electrolysis. She charged $60 per hour to remove unwanted hair. She bent over the client on an adjustable bed and, while looking through a magnifying glass, inserted an electric needle in the hair follicle, released an electrical charge and then removed the hair with tweezers. This precise and repetitive work strained the lower back, neck and wrists. The typical client came every week for six months and then every two weeks for a period until the hair stopped growing. Mrs. Dar saw six or seven clients a day and worked on each for an hour. She also performed this work at Devlin where she made $30 per hour.

At Finesse, Mrs. Dar also performed other services such as manicures, pedicures, facial masks, waxing, aromatherapy, body wraps and reflexology.

Mrs. Dar claimed that after the accident she could no longer perform electrolysis and that she quit her part-time job at Devlin. She claimed that she paid an electrolysist, Sarah Nadeem, $30 an hour to do the electrolysis at Finesse. She claimed that she continued with the other tasks of her business and in September 2000 she bought a $130,000 laser machine to remove hair. She said that she bought the laser machine because she was not making enough money and she thought it would increase her income. She used the laser machine until June 2002 when she closed the business. She said that the expenses of paying for the laser machine were too high and that she felt it was too risky to continue using the laser because she had dropped it on a client and burnt her face.

Overview:

The test for entitlement to income replacement benefits for the first 104 weeks of disability is set out in section 4 of the Schedule as:

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 test is a functional test. Mrs. Dar returned to work after the accident, although she claimed that she could not do electrolysis work. The first question is how much work Mrs. Dar did before the accident and how much work she did after the accident? The financial records of Mrs. Dar's business and employment, both before and after the accident, and Mrs. Dar's evidence that she hired Ms. Nadeem to do the work she could not do, is relevant to that question.

Disability:

Mrs. Dar's financial records were not clear and they were not supported by source documentation.

It is not clear when Mrs. Dar re-established Finesse and when she started to work for Devlin. Mrs. Dar was involved in a prior motor vehicle accident on October 23, 1996 and, according to a Canadian Back Institute assessment that was performed as a result of that accident, she closed her skin care business immediately following that accident. On February 1, 1998 she started a restaurant and on October 31, 1998 she closed the restaurant.

Mrs. Dar testified that she started to work for Devlin in 1998 or 1999. The Confirmation of Income completed by Devlin indicated that she started to work for Devlin in March 1999.

Mrs. Dar filed a Statement of Earnings for Finesse for the seven month period March 1, 1999 to September 30, 1999. Mr. Aslam Salam prepared income tax returns for Mrs. Dar. He testified that Mrs. Dar provided some information, but that he could not make sense of it. He prepared the Statement of Earnings for Mrs. Dar, but he did not know why she requested it. He testified that it could have been for a loan, although I heard no evidence that Mrs. Dar applied for a loan at this time and no evidence to explain why a potential lender would ask for a financial statement for seven months. The statement indicates that the inventory at the beginning of the period was zero which suggests that the statement covers the period when Mrs. Dar re-established the business without any inventory.

Mrs. Dar filed GST returns for 1998. Those four returns relate only to the sales by the restaurant. I found no GST returns relating to any other sales in 1998. Therefore, I find it likely that Mrs. Dar did not re-establish Finesse in 1998.

The Devlin Confirmation of Income and the Finesse statement of earnings indicate that Mrs. Dar resumed work as an electrolysist in March 1999. I found no documentary evidence that Mrs. Dar worked as an electrolysist in 1998. I find it likely that Mrs. Dar returned to electrolysis work about March 1, 1999, when she re-established Finesse and started part-time work at Devlin.

The Statement of Earnings indicates that Mrs. Dar earned $8,400 from Devlin in the seven month period March 1 to September 30, 1999. The monthly earnings of $1,200 is consistent with what Devlin reported in its Confirmation of Income form. In her 1999 income tax return, Mrs. Dar reported employment income of $19,000. She testified that the $19,000 was from Devlin but that she did not work for Devlin after the accident. When asked to explain how she could have made an additional amount of approximately $11,000 from Devlin after the accident she answered that she did not know. Nor could Mr. Salam explain where the additional $11,000 came from.

Mrs. Dar had $32,110 in sales from Finesse in the seven months before the accident, or $4,587 per month. Her 1999 tax return show Finesse sales of $46,235. Accordingly, for the remaining three months of 1999, Mrs. Dar had sales from Finesse of $14,125, or, $4,708 per month.

Mrs. Dar's 2000 income tax returns and GST returns show sales of $48,000 or $4,000 per month and her 2001 income tax returns and GST returns show sales of $58,000, or $4,833 per month for Finesse.

In September 2000, Mrs. Dar purchased a laser machine and started to use it to remove hair. She charged $900 per treatment. This may explain the increase in sales in 2001.

In general, the income tax returns tend to show that Mrs. Dar's sales from Finesse were about the same before and after the accident and her employment income from Devlin increased in the three months following the accident. When asked to explain how her sales could increase after the accident she replied by asking how could she be making more money when she was paying someone. Her explanation made no sense. Mrs. Dar claimed that she hired Ms. Nadeem to do the electrolysis work she could not do at Finesse. She submitted monthly invoices signed by Ms. Nadeem from October 1999 to February 2000. Six were for $1,685, five were for $1,600, three were for $1,200 and one was for $1,620. Mrs. Dar was unable to locate Ms. Nadeem to testify. Mrs. Dar said that Devlin paid her by cheque and it seems reasonable that she would likewise pay Ms. Nadeem by cheque. Yet Mrs. Dar did not provide source documentation or any independent testimony to support her claim that she paid these amounts to Ms. Nadeem. Nor did she explain the uniformity in the monthly invoices when she was splitting the fees received on a daily basis per client. Nor did she know why Ms. Nadeem's work was not reflected in the income tax returns or GST returns. Nor could she remember whether she told Mr. Salam that Ms. Nadeem worked for her. Mr. Salam testified that Ms. Nadeem's participation in the business should have been reflected in the financial statements and income tax returns. Lastly, Mrs. Dar did not explain why Ms. Nadeem's invoices stopped in February 2000 when Finesse continued to offer electrolysis at least until Mrs. Dar bought the laser machine in September 2000.

A month after the motor vehicle accident, Allstate's accountants wrote to Mrs. Dar and indicated that it needed certain information to calculate any income replacement benefit. Among other things it asked for:

evidence of payments made to replacement workers (i.e. copies of cancelled cheques) and the name and telephone number.

The accountants repeated the request seven times up to June 29, 2000. Mrs. Dar never answered this request.

If Mrs. Dar did hire Ms. Nadeem and split the electrolysis business with her, it is reasonable that she would have satisfied Allstate's request for information to substantiate this arrangement at the outset so that she could receive some compensation.

The financial statements are not supported by source documentation. Even if the financial statements were reliable, they show that Mrs. Dar continued to work for Devlin after the motor vehicle accident and that she did enough work at Finesse to generate sales similar to those she had before the accident. The income tax returns do not refer to the cost of any replacement labour. Mrs. Dar's claim that she was sharing fees with Ms. Nadeem on a per client basis is questionable given that Allstate asked for particulars so that it could calculate an income replacement benefit and Mrs. Dar refused to provide particulars.

Further, the reports of a number of assessors are inconsistent with the financial records as to how much work Mrs. Dar did. They are also inconsistent with Mrs. Dar's testimony that she hired Ms. Nadeem shortly after the accident to do the electrolysis work and that she did the other work. Dr. Pierre Kirwin is a physiatrist who treated Mrs. Dar after both motor vehicle accidents. He recorded on November 18, 1999, that Mrs. Dar had not returned to work in any capacity, contrary to Mrs. Dar's testimony that she returned to work and hired Ms. Nadeem to do the electrolysis work in October 1999. In January 2000, a kinesiologist who performed a work site evaluation reported that Mrs. Dar was monitoring staff she hired to replace her and that she was limited to performing administrative duties, again contrary to Mrs. Dar's testimony that she could do everything except the electrolysis work. On June 14, 2000, a physiatrist at a medical/rehabilitation DAC reported that Mrs. Dar said she returned to work in March 2000 and that her business was neglected a lot after the accident, again contrary to Mrs. Dar's testimony.

After considering all the evidence, including Mrs. Dar's explanations, I do not believe that Mrs. Dar hired anyone to replace her after the accident. I find that Mrs. Dar continued to work after the accident at or above the same level of ability she demonstrated before the accident. I find that she did not hire a replacement worker and that she was not disabled from doing electrolysis work after the accident.

Lastly, Mrs. Dar testified that she closed Finesse in June 2002 because she was not making enough money and because she had dropped the laser and burnt someone and was afraid that she might do it again. Her sales up to the time she closed Finesse were about the same as they were before the accident. Mrs. Dar took two training courses on the use of the laser for a total of five weeks. I do not believe that she would invest $130,000 in a machine unless she was confident that she could use it. Mrs. Dar used the laser for a year and a half without incident. I find that the closure of Finesse had nothing to do with an inability to use the laser safely or with any injury Mrs. Dar suffered in the motor vehicle accident.

Housekeeping:

Mrs. Dar submitted a series of weekly receipts for housekeeping expenses starting August 1999 and ending in February 2000 for $150 a week. She testified that Mrs. Ishan, the housekeeper, stopped work in August 2000 and prepared all the receipts at one time. She did not know where the rest of the receipts were.

These receipts are similar to the invoices submitted by Ms. Nadeem. Not one is supported by a cancelled cheque. Nor were they submitted to Allstate as Mrs. Dar incurred the expenses so that Allstate could investigate and pay for legitimate housekeeping expenses. I have found that Mrs. Dar performed the demanding work of electrolysis. If she could do that work, I am satisfied that she could do housekeeping. I do not believe that she hired or needed a housekeeper.

Request for DAC disability assessment:

The issue of whether Mrs. Dar asked for a disability assessment arose during cross-examination. Mrs. Dar produced a copy of a Notice of Stoppage of Weekly Benefits and Request for Assessment signed by her and dated December 16, 1999. She said she must have returned it to Allstate. She admitted that she was familiar with the DAC disability assessment process as a result of a previous motor vehicle accident. The Allstate representative testified that he reviewed Mrs. Dar's file and could not find any indication that Mrs. Dar had requested a disability assessment at a DAC. This is all the evidence I heard on this issue. On this meagre evidence, I am not satisfied that Mrs. Dar requested a disability assessment at a DAC.

Rulings:

During the hearing I made a number of rulings.

Mrs. Dar called Dr. Eric Pierre to testify. Dr. Pierre treated Mrs. Dar for a tempo mandibular joint problem. I upheld Allstate's objection and did not allow Dr. Pierre to express an opinion on Mrs. Dar's disability because Mrs. Dar did not comply with Rule 42 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code"). The relevant parts are as follows:

42.2 If a party intends to call an expert witness to present evidence at a hearing, that party must serve and file a document setting out the following:

(a) the full name, address and qualifications of the expert witness;

(b) the subject matter of the testimony to be presented; and

The time lines and requirements set out under Rule 39 and Rule 41 apply.

42.3 Where a party does not comply with the requirements of this Rule, an arbitrator may exclude a witness from the hearing or makes such other order as the arbitrator considers just.

The relevant parts of Rule 39 provide:

39.1 Subject to Rule 39.2, all documents, reports (including experts' reports) and assessments to be introduced a hearing by either party must be served on the other party at least 30 days before the first day of the hearing.

39.2 In extraordinary circumstances, a party may seek an arbitrator's permission to serve a document, report or assessment on the other party for use at a hearing less than 30 days before the first day of the hearing.

39.3 The hearing arbitrator will determine the relevance, materiality, and admissibility of evidence submitted at the hearing, but will not admit evidence at a hearing that:

(c) was not served on the opposite party in accordance with Rules 39.1 and 39.2, unless the hearing arbitrator is satisfied that extraordinary circumstances exist to justify an exception.

Mrs. Dar did not comply with Rule 42.3 and serve Allstate with a document setting out the subject matter of Dr. Pierre's proposed testimony or the substance of the facts and opinion which Dr. Pierre would present. As a consequence, Allstate did not have a fair opportunity to respond to any opinion Dr. Pierre might express. As well, Mrs. Dar did not provide any reason to explain why she did not serve Allstate with such a report. I did allow Dr. Pierre to testify as to the problems Mrs. Dar related to him.

Allstate objected to the introduction of a report from Mrs. Dar's family doctor because it was served on the second day of the hearing and because it had not received the family doctor's notes made after the motor vehicle accident. I refused to admit the report on the grounds that it was served late, contrary to Rule 39 of the Code and that it was prejudicial to Allstate to respond to a report when it had not seen the report or the notes upon which it was based in a timely fashion. Again, Mrs. Dar did not give an acceptable reason for her failure to serve this report 30 days before the hearing as required by Rule 39.2.

Allstate objected to the introduction of documentary evidence that Mrs. Dar leased the laser machine with an option to purchase. I refused to allow the evidence as I heard no evidence to explain the late production.

Dr. Pierre Kirwin is a physiatrist who treated Mrs. Dar. Allstate objected to him expressing an opinion on disability since he had not expressed an opinion in any report. I upheld the objection because Mrs. Dar had failed to comply with Rule 42 of the Code. Again, it was prejudicial to Allstate because it did not have a fair opportunity to respond to the report. Again, Mrs. Dar did not explain the late production.

EXPENSES:

If the parties cannot agree on the issues of entitlement to or amount of expenses of the arbitration proceeding, they may make written submissions to me on both issues within 45 days of the date of this decision in accordance with the provisions of Rules 79 of the Code.

March 5, 2003

William J. Renahan Arbitrator

Date