Neutral Citation: 2008 ONFSCDRS 32 FSCO A07-000570

BETWEEN:

JODI MONKS Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

PRE-HEARING DECISION

Before: Arbitrator Suesan Alves Heard: By telephone conference call on November 9, 2007

Appearances: Robert A. Zigler for Ms. Monks Jane Cvijan for Dominion of Canada General Insurance Company

Issue:

The Applicant, Jodi Monks, was injured in a motor vehicle accident on September 28, 2003. She applied for and received statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹ Ms. Monks applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. She seeks entitlement to income replacement benefits from April 3, 2005 to date and ongoing, interest and expenses. Dominion disputes all of Ms. Monks’ claims and seeks its arbitration expenses.

At the resumption of the pre-hearing discussion held on November 9, 2007, counsel for the Insurer sought production of the Applicant’s 2002 income tax return. The Applicant disputed that this document was relevant.

The issue is:

Is Ms. Monks obliged to produce her 2002 income tax return when her claim for income replacement benefits was based on the four weeks before the accident?
Is Dominion of Canada entitled to its expenses of this motion?

Result:

Ms. Monks is obliged to produce her 2002 income tax return.
The expenses of this motion are in the discretion of the hearing arbitrator.

EVIDENCE AND ANALYSIS:

Background

Ms. Monks was injured in a motor vehicle accident on September 28, 2003. At the time of the accident she was employed as an office manager, payroll at the Alpine Group. Ms. Monks had worked with that employer since 1985.

Ms. Monks designated the four weeks before the accident as the period Dominion would use to calculate the amount of her income replacement benefit. She provided Dominion of Canada with an Employer’s Confirmation of Income to substantiate her claim. According to that document, in the four weeks before the accident, she worked 35 hours per week and was paid a gross salary in the four weeks before the accident of $650 per week.

Dominion paid Ms. Monks income replacement benefits until April 2005 based on the documentation her employer provided. Ms. Monks returned to the Alpine Group after the accident at reduced hours and Dominion reduced the amount it paid her as an income replacement benefit by her post-accident earnings.

In this arbitration Ms. Monks seeks entitlement to pre104-week income replacement benefits as well as post 104-week benefits. Ms. Monks is presently working with her pre-accident employer. Her counsel submits that she nevertheless meets the test for entitlement to post 104-week benefits, because she works in an accommodated environment, provided by a business which her father owns, and where she works perhaps ten to fifteen hours per week. He submits that Ms. Monks is not employable in the competitive work force.

The Insurer seeks production of the Applicant’s income tax return for 2002, the year prior to the accident. Dominion submits that it needs this document to substantiate Ms. Monks’ earnings from employment. It also submits that it needs this document to establish one aspect of the disability test in the post 104-week period, namely, her level of remuneration.

The Applicant disputes that this document is relevant. Income tax returns are routinely requested and produced at arbitration proceedings where the Applicant’s claim for income replacement benefits is based on earnings in the 52 weeks before the accident. However, Ms. Monks submits that her income replacement benefit was based on her earnings as an employee in the four weeks before the accident. Nothing therefore turns on her earnings in the year before the accident. Accordingly, her income tax return for the year before the accident has no probative value and should not be produced.

For the reasons which follow, I find the document relevant to Ms. Monks’ claim for post 104- week income replacement benefits and that she is obliged to produce her 2002 income tax return.

Reasons:

The discovery process at the Commission is abbreviated and involves the exchange of documents.² The goals of that process are to ensure sufficient disclosure so that a party may assess the strengths and weaknesses of its own case as well as that of the other party, obtain admissions, obtain evidence which may be used at a hearing to impeach the credibility of witnesses, with a view to promoting settlement and making the hearing process more efficient and fair. Thus, at the pre-hearing stage of the process, so long as the documents in question have a semblance of relevance, or “seem” to be relevant, documents should be produced.³

The test for the production of a document is relevance. If a document is relevant, it ought to be produced, unless it should be shielded because of privilege, or because the prejudicial effect of disclosure far outweighs its probative value.

“Relevance depends directly on the facts in issue in any particular case. ... To be logically relevant, an item of evidence ... must simply tend to “increase or diminish the probability of the existence of a fact in issue.”⁴ The facts in issue are determined by examining the applicable legislation, case law and the allegations of the parties.

The test for entitlement to post 104-week income replacement benefits is “a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience.”

In Henriques and Motor Vehicle Accident Claims Fund,⁵ Director’s Delegate Draper held that the test for suitable employment should be applied with a sense of reality. “Suitable employment will depend on the person’s particular circumstances. While remuneration is an important factor, the suitability of alternative work is not strictly governed by what the person happened to earn in the four weeks before the accident.”

The weight to be given to an insured’s pre-accident earnings may vary, depending on the circumstances of the case. I find that Ms. Monks’ 2002 income tax return may be relevant in establishing a component of the test for suitable employment. Ms. Monks’ 2002 income tax return may be consistent with her having earned $650 per week for most or all of 2002, as she did in the four weeks before the accident. In that case, nothing will likely turn on the production of the document. The earnings shown in that tax return could perhaps give rise to factual disputes as to the appropriate level of remuneration and the numbers of hours of work to be considered in determining suitable employment for Ms. Monks in the post 104-week benefit period.

In Vellipuram and State Farm Mutual, (FSCO A05-002629 December 8, 2006), Arbitrator Blackman gave significant weight to the Applicant’s pre-accident income in determining suitable work under the post 104-week test. In that case Arbitrator Blackman held that the jobs which the Insurer submitted were suitable work for the Applicant, namely an office cleaner, dishwasher and general restaurant helper, were inappropriate and unsuitable when compared against his skilled pre-accident employment as a welder. The unskilled jobs paid roughly $8 per hour at entry level, an amount which was between half and two-thirds of Mr. Vellipuram’s actual or potential income as a welder.

Counsel for the Applicant relies on the case of Milroy Varatharajah and TTC Insurance Company Limited, (FSCO A05-001257 February 2, 2006) in which the arbitrator denied the Insurer’s request for production of the Applicant’s income tax returns for 2004 and 2005. In that case, Arbitrator Murray stated: “Mr. Varatharajah's income tax returns are not relevant to the issues in the arbitration hearing because they would only establish whether or not he earned income from employment, not his physical capabilities. Production of his income tax returns is not necessary.”

As noted earlier, relevance is fact specific. In Varatharajah, the Arbitrator was determining whether the Applicant’s income tax returns were relevant to his claims for medical benefits -- physiotherapy, chiropractic therapy and massage therapy, as well as housekeeping expenses under the Schedule and a special award. Unlike Ms. Monks, the Applicant in that case was not asserting a claim for income replacement benefits.

Ms. Monks did not submit that it would be unduly onerous to produce her income tax return. I find this document is not shielded by privilege, that disclosure of the document is integral to allowing the parties to properly assess the strengths and weaknesses of their cases prior to the arbitration hearing.

For these reasons, I conclude that the Applicant is obliged to produce a copy of her 2002 income tax return

Expenses:

The Insurer claimed its expenses of the motion. I leave this issue in the discretion of the hearing arbitrator.

February 29, 2008

Suesan Alves Arbitrator

Financial Services Commission of Ontario