Chau v. Guarantee Company of North America, 2004 ONFSCDRS 59

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2004 ONFSCDRS 59 FSCO A02-001650

BETWEEN:

LONG THANH CHAU Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Eban Bayefsky

Heard: September 4, 2003 and January 26 and 27, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Albert Conforzi for Mr. Chau Gregory Van Berkel for Guarantee Company of North America

Issues:

The Applicant, Long Thanh Chau, claims he was injured in a motor vehicle accident on March 6, 2002. He applied for statutory accident benefits from Guarantee Company of North America ("Guarantee"), payable under the Schedule.¹ Guarantee denied Mr. Chau's claim for weekly income replacement benefits and housekeeping expenses. The parties were unable to resolve their disputes through mediation, and Mr. Chau applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The substantive issues for arbitration are whether Mr. Chau is entitled to income replacement benefits, housekeeping expenses and a special award. On the first day of the preliminary issue hearing, Mr. Chau raised two objections to Guarantee's case, the first pertaining to the late service of expert reports and the second relating to the Insurer's failure to notify Mr. Chau of the reasons for denying him benefits. By decision dated December 17, 2003, I found that Guarantee could introduce the three expert reports in question and call the expert as a witness. I further found that Guarantee had provided Mr. Chau notice under section 48(2) of the Schedule on December 19, 2002 and that the preliminary issue hearing could, therefore, proceed to consider whether, as of that date, Mr. Chau was disentitled to benefits on the basis that he wilfully misrepresented material facts with respect to his application for benefits.

The preliminary issues are:

1. Is Mr. Chau disentitled to benefits, as of December 19, 2002, on the basis that he wilfully misrepresented material facts with respect to his application for benefits, pursuant to section 48(1) of the Schedule?

2. Is either party entitled to its expenses of the preliminary issue hearing?

Results:

1. Mr. Chau is not disentitled to benefits pursuant to section 48(1) of the Schedule.

2. If required, the parties may now make submissions on the issue of expenses.

EVIDENCE AND ANALYSIS:

Background

Mr. Chau claims statutory accident benefits on the basis that he was injured in a motor vehicle accident on March 6, 2002. Mr. Chau also claims to have been involved in another accident two days later. However, he made no claims as a result of this incident. Guarantee maintains that the March 6, 2002 accident could not have happened as alleged by Mr. Chau and that he is, therefore, disentitled to benefits on the basis that he wilfully misrepresented material facts with respect to his application for benefits. In final submissions, Guarantee added that Mr. Chau was not involved in an accident at all and was disentitled to benefits on this basis as well.

Mr. Chau gave two statements following the accident. On May 2, 2002, he gave a statement to an adjuster from Cunningham Lindsay. On approximately July 18, 2002, he gave a statement to Mr. Stan Swann, an investigator with TSI Solutions Inc. ("TSI"), a private investigative agency. In both statements, Mr. Chau said that he was travelling along Highway 86 in Kitchener when the accident happened. The Cunningham Lindsay statement then contains the following:

The speed limit is I think 80 kilometres. I am not sure. I was driving and I was in the left lane. I was travelling about 80 kilometres. I was on my way to buy soup at the Chinese restaurant for my children. The weather was clear. The roads were dry. There is cement sides on the highway. A sports utility vehicle to my right suddenly changed lanes to the left lane in front of me. I tried to avoid the vehicle and in doing so struck the cement wall to my left. The front left part of my car collided with the wall. I was wearing my seatbelt. My vehicle does not have airbags. I do not remember if I hit my body at the time of the impact. I do remember jerking around.

The following is reported in the second statement:

The following is Mr. Chau's statement of events:

I was driving on the left lane of Highway 86. There was a black SUV he cut me off. I was trying to move away from him, and some how my car spin, and the front left of my car hit the on the rails on the highway.

Upon questioning the following information was obtained:

• Indicated he was travelling at 80 kph at time of accident.
• Travelling in the left hand collector lane.
• Advised there is a metal guardrail between the collector and express lanes.
• When the SUV cut in front of him he braked.
• Stated his vehicle did not go straight, and it slid into the guardrail.
• Insured estimated his speed when he struck the guardrail at approximately 60 kph.
• He does not remember how his body moved on impact, just that he felt a lot of pressure.
• The seat belt stopped him from going forward.

Mr. Swann prepared a report, dated July 18, 2002, in which he concluded that Mr. Chau had given two different accounts of the location of the accident, namely, that it had occurred in the express lanes against a cement wall, and that it had occurred in the collector lanes against a metal guardrail.

On July 30, 2002, Mr. Rob Seaton, a collision reconstructionist with TSI, reported that, based on photographs of Mr. Chau's vehicle taken on either March 12 or March 13, 2002, and based on Mr. Chau's respective statements, "the reported sequence of events provided by the insured is not consistent with his vehicle contacting a metal or concrete barrier, as the damage to the insured Honda is not consistent with the dimensions or physical profile of the barriers as discussed in the findings section of this report." Mr. Seaton repeated this conclusion in a second report, dated May 28, 2003. Mr. Seaton attended and investigated the alleged scene of the accident in July 2003. He prepared a final report on July 15, 2003 in which he confirmed his earlier conclusions.

Findings

The caselaw establishes, and the parties agree, that Guarantee bears the onus of showing that Mr. Chau wilfully misrepresented material facts with respect to his application for benefits.² For the following reasons, I find that Guarantee has failed to discharge this onus.

In TSI's first report, Mr. Swann compared the two statements taken from Mr. Chau and concluded that Mr. Chau had given two different accounts of where the accident had occurred. Mr. Swann recommended that the Motor Vehicle Accident Reports be obtained from the Waterloo Regional Police and the Ontario Provincial Police ("OPP").

Mr. Swann's recommendation for further investigation suggests, and I find, that the apparent inconsistency between Mr. Chau's two statements is not, in itself, sufficient to establish that Mr. Chau wilfully misrepresented the circumstances of the accident. Guarantee conducted no further questioning of Mr. Chau as to this apparent discrepancy. Mr. Chau was not obligated to, and did not, testify in his own behalf, and, to the extent that it was able, Guarantee did not seek to cross-examine him on his two statements. For the following reasons, I find that both statements are unreliable.

The first statement was not written by Mr. Chau. It contains language that likely did not come from him. For example, despite the very simple language exhibited at other points in the first statement, as well as the broken English in the second statement, the first statement reports Mr. Chau as having said that his common-law wife was her children's "biological mother" and "their primary caregiver." The first statement was typed in English and then translated back to Mr. Chau in Vietnamese. Mr. Chau refers both to "cement sides on the highway" and striking the "cement wall to my left." Some time later in the investigation, it was determined that there were cement curbs adjacent to both the cement barrier and the metal guardrail on the highway. I find the references to "cement sides" and "cement wall" ambiguous. In the absence of further information on this point, and given the general problems with the statement, I am not prepared to find that Mr. Chau's description of the objects he struck in the accident is necessarily inconsistent, such as to support a finding that he wilfully misrepresented the circumstances of the accident.

The second statement is also problematic. It is not Mr. Chau's full statement. It is a combination of quotations from his interview with Mr. Swann, and summaries of what he is alleged to have said in the interview. In cross-examination, Mr. Seaton stated that he had not seen a transcript of the interview, and Guarantee was unable to explain why one had not been entered into evidence. Mr. Swann testified that it might have assisted him in interpreting the evidence, although he was not prepared to say that it would have altered his conclusions. In final submissions, Guarantee conceded that it would have been preferable to have the transcript available. Mr. Seaton was unable to say whether an interpreter had been used in the interview. There is no evidence that one was offered to Mr. Chau, although one was used for the first statement. Mr. Swann compared the two statements to conclude that Mr. Chau had given two different accounts of the location of the accident, but did not question Mr. Chau about this apparent discrepancy. In my view, in order to maintain that Mr. Chau had wilfully misrepresented the circumstances of the accident, Guarantee ought to have sought an explanation from Mr. Chau as to the different reports and/or given him an opportunity to clarify the matter.

Guarantee argued that it did not need to approach Mr. Chau about the apparent conflict since it investigated the accident based on both of the versions he presented, concluding that neither was possible. However, Mr. Seaton's analysis of the accident contains various problems.

The first is that Mr. Seaton relied heavily on Mr. Chau's estimate of the speed of his vehicle at the time of the collision. In his first two reports, Mr. Seaton stated that "the damaged area [on Mr. Chau's car] does not appear to reflect any abrasions contained within the recessed area, which would be inconsistent with vehicle contact on a metal rail, at the reported speed of 60 km/h as stated by the insured." In his third report, he stated that, with regard to hitting a cement curb prior to hitting a metal guardrail, the "absence of wheel, tire, suspension, rocker-panel or under-carriage damage is not consistent given the reported impact speed with the barrier of approximately 60 km/h by Mr. Chau" (emphasis in original). However, in cross-examination, Mr. Seaton admitted that a person's estimate of the speed of their car at the time of an accident can be very unreliable, particularly where, as here, the car is said to have spun prior to impact. For this reason, Mr. Seaton conceded that even if Mr. Chau had been mistaken about driving at 60 km/h, his estimate of the speed at which he was travelling might have been innocent. Mr. Seaton agreed that proper collision reconstruction ought to be based on objective evidence, not a person's description of an accident.

Mr. Seaton also gave contradictory evidence as to the weight he attributed to Mr. Chau's estimate of speed. At one point, he said that he did consider whether Mr. Chau's car might have been moving at a speed less than the reported 60 km/h in assessing the likelihood that his car struck either a metal guardrail or a cement barrier. At another point, he testified that he did not analyze what a car might have done at a low speed, given that there were too many factors to consider. Mr. Seaton's reports contain no analysis of what may have happened if Mr. Chau had been travelling at a lower speed than the estimated 60 km/h.

As noted above, Mr. Chau apparently told Mr. Swann that his car spun prior to hitting the guardrail. Mr. Seaton testified that it is important in collision reconstruction to know how much, and in what direction, a car spun at the time of an accident. He said that this would affect both the determination of the speed of the car upon impact as well as the driver's ability to estimate this speed. However, neither Mr. Swann nor Mr. Seaton pursued this issue further. Mr. Seaton did say that, if Mr. Chau's car had spun before it hit a guardrail or barrier, there would be evidence of a spin on the roadway. However, neither Mr. Swann nor Mr. Seaton attended at the scene of the accident until July 2003 (roughly 16 months after the alleged accident). While the OPP investigation at the time made no comments about spin or skid marks, Mr. Seaton testified that any marks on the road could have been washed away by the time he attended at the accident scene.

In his final report, Mr. Seaton stated that "tire mark evidence would have been expected if the Honda had spun as suggested by Mr. Chau, given the reported dry asphalt and the reported impact speed of 60 km/h provided by Mr. Chau. This was not indicated" (emphasis in original). As noted, Mr. Seaton's conclusion rests on Mr. Chau's unreliable estimate of his speed at the time of impact and does not take into account the fact that any marks on the road may have disappeared with the passage of time. Mr. Seaton stated in his report that "there was no evidence of any pre-impact or evasive tire mark evidence on the collision report." However, he testified that the collision report made no mention, one way or the other, about the presence of skid marks, that the investigating officer should have examined the road for such marks, and that he did not attempt to contact the investigating officer to ask about this issue. Again, I find that this undermines Mr. Seaton's conclusions as to the veracity of Mr. Chau's description of the accident.

Mr. Seaton's reports are further undermined by his reliance on the photographs of Mr. Chau's car. Mr. Seaton said that he did not examine the car itself. He testified that photographs were not helpful for "crush analysis" or detailed speed analysis in accident reconstruction. However, an important aspect of Mr. Seaton's reports is his assessment of the apparent damage to Mr. Chau's car as it relates to the objects allegedly struck. Mr. Seaton began his testimony by indicating that a basic principle in accident reconstruction is to have measurements as to the elevation of the car and as to the point of impact. However, Mr. Seaton based his conclusions to a large extent on photographs of Mr. Chau's car; he did not examine the car or take any measurements. Mr. Seaton did obtain the general specifications and dimensions of a car similar to Mr. Chau's, but he simply disclosed this information to Guarantee, without analyzing it or discussing it in his report.

Mr. Seaton also testified that, if Mr. Chau's car had collided as described with either a metal guardrail or a cement barrier, he would have expected to see contact on the middle of the left-side car door or the rear left quarter panel. However, the photographs he relied on did not clearly show the left side or rear of the car.

Mr. Seaton also testified that he relied on an enlarged version of a key photograph of the front left end of Mr. Chau's car, and that this would verify his findings. However, he did not mention that he used this photograph in his report and stated that he did not keep a copy of it. Mr. Chau, therefore, had no opportunity to examine this picture. I find this particularly problematic in light of Guarantee's very serious allegation that Mr. Chau wilfully misrepresented the circumstances of the accident.

However, even if it were not important to have the enlarged version of the relevant photograph, that picture and the others relied on by Mr. Seaton in assessing the damage to Mr. Chau's car were taken four to five days following the second accident in which the car had been involved. Given Mr. Seaton's emphasis on the observed damage to Mr. Chau's car as it relates to a possible collision with a curb, cement barrier or metal guardrail, I find that his reliance on pictures that post-dated the second accident, significantly undermines his conclusions as to the likely mechanism of the first accident.

In addition to the noted photographs, Mr. Seaton relied on damage appraisal reports prepared on March 11, 14 and 15, 2002 to conclude that the damage to Mr. Chau's car was inconsistent with his description of the accident. The appraisal reports were also problematic because they post-dated the second accident. However, to the extent that they were instructive, Mr. Seaton conceded that the reported "swayed unibody" may have been caused by a slow speed impact (of the type in which Mr. Chau may have been involved). Mr. Seaton also noted in his final report that one of the photographs did not show any structural damage to the front of Mr. Chau's car. However, he did not discuss the second appraisal report's reference to a "structural report" on the car.

In all of the circumstances, I find that Guarantee has not discharged the onus on it of showing that Mr. Chau wilfully misrepresented the circumstances of the accident, so as to disentitle him to statutory accident benefits. While there are areas that could be clarified (for example, the apparent discrepancy in Mr. Chau's statements), there are simply too many weaknesses in Guarantee's analysis to conclude, at this stage of the proceedings, either that the accident did not take place as described by Mr. Chau or that he was not involved in an accident at all. I, therefore, find that Mr. Chau is not disentitled to benefits on the basis that he intentionally misrepresented material facts with respect to his application for benefits.

EXPENSES:

If required, the parties may now make submissions on the issue of expenses.

April 27, 2004

Eban Bayefsky Arbitrator

Neutral Citation: 2004 ONFSCDRS 59 FSCO A02-001650

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

LONG THANH CHAU Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Chau is not disentitled to benefits pursuant to section 48(1) of the Schedule.

April 27, 2004

Eban Bayefsky Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
2. 2See, for example, Michalowski and St. Paul Fire & Marine Insurance Company (FSCO A98-001492, July 9, 1999), Jimcaale and TTC Insurance Company Limited (FSCO A00-001311, February 27, 2002), Szabo and CAA Insurance Company (Ontario) (FSCO P03-00015, March 31, 2004) and Fisk and ING Insurance Company of Canada (FSCO P03-00028, April 21, 2004). I accept the proposition in Szabo that a wilful misrepresentation of material facts can disentitle an insured from claiming benefits, even if, as here, no benefits have been paid.