Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 14

FSCO A07-002403

BETWEEN:

MR. K

Applicant

and

AVIVA CANADA INC.

Insurer

Before: William J. Renahan

Heard: November 3, 4, 5 and 6, 2008, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Robert Zigler and Marc Koplowitz for Mr. K

William G. Scott for Aviva Canada Inc.

Issues:

The Applicant, Mr. K, was injured in a motor vehicle accident on July 15, 2003. He applied for and received statutory accident benefits from Aviva Canada Inc., payable under the Schedule.¹ Aviva terminated weekly income replacement benefits on January 1, 2007. The parties were unable to resolve their disputes through mediation, and Mr. K 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 Mr. K entitled to income replacement benefits after January 1, 2007?
What is the amount of any income replacement benefit?
Is Mr. K entitled to interest, pursuant to section 46(2) of the Schedule, on overdue payments?
Is either party entitled to expenses of the arbitration proceeding?

Result:

Mr. K is entitled to income replacement benefits after January 1, 2007.
The amount of income replacement benefit is $400 per week.
Mr. K is entitled to interest, pursuant to section 46(2) of the Schedule, on overdue payments.
The issue of expenses of the arbitration proceeding is deferred.

EVIDENCE AND ANALYSIS:

Introduction:

At the time of the head-on collision, Mr. K was 42-years-old and the sole shareholder of a garbage hauling business with sales of about $3 million a year. His most serious physical injury was fractures to the tibia at the knee joint. His recovery and rehabilitation were complicated because Mr. K is overweight. After paying weekly income replacement benefits (IRBs) for more than three years, Aviva terminated those benefits on January 1, 2007 on evidence that Mr. K did not meet the test for entitlement as he was not completely disabled from engaging in suitable employment.

Mr. K returned to his office on May 16, 2008 for 50 hours a week. He claimed that he performed only a small portion of his normal duties and that he was disabled from engaging in suitable employment.

Aviva did not dispute the seriousness of Mr. K’s injuries. However, it argued that Mr. K returned to work and could work. It argued that any potential IRB was subject to deductions for post-accident income. Among other things, it relied on evidence that Mr. K received $12,000 in income in each of 2004 and 2005, and that Mr. K only stopped taking income from his companies when his bookkeeper discovered that the income reduced his income replacement benefit.

The testimony consisted of that of Mr. K and his wife. Mr. K met his future wife in 2000 when he hired her to work in his office. Later, they dated and they married in July 2005.

Suitable employment:

Under section 5(2) of the Schedule, the insurer is not required to pay an IRB for any period longer than 104 weeks of disability,

unless, as a result of the accident, the insured person is suffering a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience

I therefore consider Mr. K’s education, training and experience to determine what is suitable employment for him.

Mr. K left high school part way through grade 10. He undertook no further formal education. He worked three or four years in his father’s three gas stations and then another five years with garbage removal companies. He learned every aspect of the business and in 1989 started his own business, a hauler of garbage, and a few years later, a business which operated a garbage transfer station.

The construction of buildings requires someone to remove the garbage generated by construction. Mr. K’s business was to service this need by supplying garbage container bins to builders. The bins are 14 to 40 feet long. They are on rails and are delivered to and picked up from the construction site by a truck. At the time of the accident, Mr. K’s companies leased a 10,000 square foot shop and two acres of land for storage. He testified that he had 18 or 21 trucks and 291 container bins in four different sizes. He had about 20 employees, most of whom were drivers.

Mr. K started work at about 5:30 a.m. He solicited business by going to construction sites early in the morning to talk to construction superintendents about their garbage removal needs. He then would arrange for his office staff to prepare a written quotation. Often he would tender a quotation from each of his two companies. Mr. K spent about 30% of his time at his desk. He made run sheets, dispatched drivers and signed cheques. He did very little clerical work and had no knowledge of bookkeeping or government filings.

Besides going to construction sites, Mr. K also engaged in physical activity in his shop. At the time of the accident, Mr. K was 5' 6 ½" tall and weighed 330 pounds. I accept the detailed and consistent evidence of him and his wife that he performed significant physical activities despite his weight.

If a driver was not available, Mr. K would drive a truck to deliver or pick up a container. This work involved climbing up on the container to secure a tarpaulin over the load. In order to prevent costly break downs away from the garage, Mr. K inspected his bins daily for damage and serviced and repaired the bins and trucks. This involved getting down on his hands and knees and crawling under equipment or laying on a creeper and working on his back. He used an oxy-acetylene welder to cut out damaged metal and a Mig welder to make repairs. He stocked his shop with steel flat bar, c-channel and angle-iron in 20 foot lengths. He also stocked 1/4” and 3/8” thick 4 x 8 foot sheets of steel. The steel was used for repairs to hinges, doors, skid plates, rails, and frames. If he and another worker could not lift a piece of metal, he used a cherry picker or backhoe to move the metal. He adjusted clutches and brakes on his trucks and changed worn parts such as belts and hydraulic hoses. He also changed oil. Mrs. K said that Mr. K came home from work every day filthy from working on the bins and trucks.

I accept Mrs. K’s testimony that before the accident, Mr. K was vibrant, energetic and full of life. He was not afraid of anyone or anything. He was happy and a lot of fun. Mr. K presented as a personable witness and I find that his personality contributed to his success in selling his services.

As part of an insurer’s examination, a neuropsychologist found that Mr. K scored highest for those occupations that are directive in nature where the worker enjoys taking responsibility in controlling work-related situations and is comfortable giving orders to others according to set rules. I agree that this assessment applies to Mr. K.

Conclusion on suitable employment:

Having regard to Mr. K’s education, training and experience, I find that suitable employment includes employment that pays approximately $54,000 per year, which is what Mr. K earned at the time of the accident. Mr. K was a successful, self-made entrepreneur. Suitable employment would include significant aspects of entrepreneurial activity, management, sales and mechanical tasks. The fact that Mr. K may not have had the necessary licences to perform some of the mechanical tasks he performed, does not negate the fact that mechanical tasks were part of his work and that suitable employment includes mechanical tasks.

Impairments:

Mr. K’s tibia fractures were stabilized with five, five-inch screws. He did not bear weight on his leg for five months. As a result of inactivity, his weight is now 400 pounds. He can walk about 15 minutes on even ground before he has to rest because of pain. He suffered a toe fracture which hurts in humid weather. He has lost energy. He drags himself to work and now needs a two-hour nap during the day.

The evidence on Mr. K’s hygiene needs was not consistent. A psychiatrist at an insurer’s examination reported that it was difficult for Mr. K to wipe himself properly after a bowel movement. “His wife may help. As a result of this problem he is afraid to go out with his friends as he cannot wipe himself if he has to have a bowel movement.” The neuropsychologist reported that Mr. K “occasionally” required help from his wife in this regard. Mr. K testified that he needs help from his wife for bathroom hygiene “at times” including at the office and that he feels embarrassed. Mrs. K testified that she helps Mr. K every time after he goes to the bathroom which is 15 or 30 minutes after he eats and three to five times a day. She testified that they cannot go out to dinner.

I find that Mr. K minimized the amount of help he needs with bathroom hygiene due to embarrassment and that he requires help several times a day, every day.

Considering Mr. K’s former vibrant and happy personality, his current anger and depression is an impairment.

Whether Mr. K can engage in suitable employment:

Mr. K returned to his office for 50-hour weeks on May 16, 2008. The first question is whether he can return to his former employment.

I accept that prior to May 16, 2008, Mr. K went into his office a few hours a week to sign cheques and tenders. Although he received $12,000 in income from his companies in each of 2004 and 2005, he had serious mobility and healing problems during these two years and only went to work for a few hours a week using a walker and crutches. He depended on his wife and his right-hand man to tell him what was happening at work. In 2007, he went to work two or three times a month to do dispatching when his right-hand man was not available. He only returned to work on May 16, 2008 because his right-hand man quit.

The year end of Mr. K’s companies was July 31, two weeks after the motor vehicle accident. It is therefore easier to compare and assess how Mr. K’s impairments affected year over year sales. The combined sales of Mr. K’s two companies declined 6% in 2002 and 17% in 2003. I accept Mr. K’s explanation that this decline was due to the loss of the transfer station due to a conflict with a business partner. Because of the loss of the transfer station he could not offer as good a rate to his haulage customers. For the year ending July 31, 2004, the year following the accident, sales declined 33% from about $3 million to $2 million. Since then, sales have continued to decline from 2 to 4% per year. The businesses have gone from 18 trucks at the time of the accident to seven. The number of employees has decreased from about 20 to five. Mr. K has increased the mortgage on his house. His lease on his business premises is $10,000 a month and he owes 18 months rent to his landlord, a friend of 20 years.

I find that the decrease in Mr. K’s business is due to Mr. K’s inability to sell and promote his services because he cannot walk around construction sites and deal with the people who buy his services. I accept Mr. K’s testimony that now, his sales are to old loyal customers. I also find that Mr. K cannot operate, service, repair or maintain his containers and trucks because of his pain and impairments. Although he is in the office from 5:30 a.m. to 5:00 or 7:00 p.m., he takes a two-hour nap every day and often dozes in his dispatching chair. I accept Mrs. K’s testimony that because of his pain, physical restrictions, loss of energy and inability to promote his business, Mr. K is depressed and angry and forces himself to go to work. These problems affect his ability to successfully manage his employees and his business.

In conclusion, Mr. K cannot engage in his former employment.

Although Mr. K has the burden of proving that he cannot engage in suitable employment, he is not required to prove every possible negative. He is not required to identify every suitable employment and then prove that he cannot engage in that employment. In this case, having established his impairment and restrictions and inability to do his former work, the evidentiary burden shifts to Aviva to present evidence that there is suitable employment which Mr. K can do.

Aviva arranged for Work Able Centres Inc. to assess Mr. K to determine whether he could engage in suitable employment. Following assessments by a physiatrist, psychiatrist, occupational therapist, cardiologist and a psychologist in October and December 2006, the assessors concluded that Mr. K could engage in four occupations which it described as follows:

NOC Minor Group Area

Minor

Group Code

NOC Unit Group Area

Unit

Group Code

Other Services Manager

065

Other Services Manager

0651

Recording, Scheduling and Distributing Occupations

147

Purchasing and Inventory Clerks

1471

Retail Salespersons and Sales Clerks

642

Retail Salespersons and Sales Clerks

6421

Automotive Service Station Attendants

662

Service Station Attendants

6621

I have no other evidence concerning these occupations. The descriptions do not contain enough information to determine whether they are suitable for Mr. K having regard to my findings of what is suitable employment. On its face, I cannot determine that these jobs include significant aspects of entrepreneurial activity, management, sales and mechanical tasks.

Mr. Fred Winch, a rehabilitation consultant, prepared a vocational assessment for Mr. K which demonstrates a greater knowledge of Mr. K’s employment background. I accept his assessment that some of the employment identified by Work Able is demeaning and inappropriate and none of the jobs are comparable to Mr. K’s employment background.

Lastly, Mr. K needs his wife to assist him with hygiene in the bathroom. As well, on account of his restrictions and pain, Mr. K is angry and depressed and expresses that at work. I agree with Mr. Winch’s conclusion that at this time, Mr. K can only work in a protective environment where he is only accountable to himself.

Post accident income:

Mr. K is the sole shareholder of his two companies. Mr. K’s arithmetic skills are at a grade 5 level. He and Mrs. K were unable to answer many questions concerning the companies’ accounts. They had little understanding of the companies’ finances.

In 2004 and 2005, when Mr. K was either not working at all, or going to the office a few hours a week, his companies paid him $12,000 in each year. Mr. K said he left the decision of how much the companies paid him to his accountant and bookkeeper. Aviva paid income replacement benefits on the basis that Mr. K did not have any post-accident income, and when it learned of the income, it notified Mr. K that it would recover the overpayment by making deductions from his weekly income replacement benefit until the overpayment was recovered. Shortly after, the companies stopped paying Mr. K a salary. I accept that Mr. K left the decision of how much pay he would receive to his accountant and bookkeeper.

The issue of whether Mr. K received income from his companies in other forms was addressed. Mrs. K’s salary before the accident increased very little after the accident. I find that Mr. K did not receive income through his wife’s salary.

Mr. K’s main hobby was dragster racing. I heard testimony as to the cost of engaging in this hobby and where the money came from. The issue was whether this was an expensive hobby and whether Mr. K received income to finance this hobby from his companies.

Mr. K was involved in dragster racing. He had an alcohol-fueled “funny car” which his team raced on quarter mile straight tracks. His team includes his son, his wife and four other individuals, one of whom was the driver who also drove a truck and trailer which carried the race car. The team drove to races in Southern Ontario and the Eastern United States. In 2007, Mr. K travelled to races in Grand Bend, Ontario, Massachusetts, New Hampshire and North Carolina. Mr. K used a golf cart at the race tracks to get around. Since 1999, he has traveled to the tracks in a motor home. His company leases his current motor home for $1,300 per month. All of the team are volunteers. Most of the expenses, including oil, fuel, tires and entry fees, are paid or donated by sponsors, family or friends. I find that any cost of this hobby was a promotional expense of his companies and not income to Mr. K.

At this time, I have no reliable evidence that Mr. K has received any income from his companies which is deductible from his income replacement benefit. .

EXPENSES:

If the parties cannot agree on the issue of entitlement to expenses of the hearing, they may make written submissions to me. The party requesting expenses has 30 days, and the responding party has 15 days to respond. After the issue of entitlement is agreed or determined, and if the parties cannot agree on the amount of expenses, they may make written submissions in accordance with Rule 79 of the Dispute Resolution Practice Code.

February 4, 2009

William J. Renahan

Arbitrator

Date