Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 72 FSCO A08-000172

Between:

Hamidreza Daryoosh Adami, Applicant

and

Wawanesa Mutual Insurance Company, Insurer

Reasons for Decision

Before: William J. Renahan Heard: April 20, 21 and 22, 2009, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Raymond Watt for Mr. Adami Donald G. Cormack for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Hamidreza Daryoosh Adami, was injured in a motor vehicle accident on February 22, 2002. He applied for statutory accident benefits from Wawanesa Mutual Insurance Company, payable under the Schedule.¹ Wawanesa did not pay income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Adami 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:

1. Is Mr. Adami entitled to income replacement benefits from March 1, 2002 pursuant to section 4(3) of the Schedule?

2. What is the amount of any income replacement benefit?

3. Is Mr. Adami entitled to interest pursuant to section 46 of the Schedule?

4. Is Mr. Adami entitled to a special award pursuant to section 282(10) of the Insurance Act?

5. Is either party entitled to expenses of the arbitration proceeding?

Much of the documentary evidence which I found probative, was produced by Mr. Adami to Wawanesa for the first time during the course of the hearing. Mr. Cormack raised the issue of late production, however, he did not object to the introduction of the evidence. In his closing argument, Mr. Cormack stated that whether benefits should be suspended for Mr. Adami’s non-compliance with section 33 of the Schedule was not an issue. Accordingly, I do not deal with whether section 33 applies. However, I do deal with the late production of documentary evidence when I consider the special award issue and whether Wawanesa unreasonably withheld benefits.

Result:

1. Mr. Adami is entitled to income replacements benefits from March 15, 2002.

2. The amount of income replacement benefit from March 15, 2002 to July 15, 2002 is $329.35 per week less a deduction under subsection 6(2) of the Schedule to account for gross weekly income of $109.37. The amount of income replacement benefit from July 16, 2002 to August 11, 2004 is $329.35 per week less a deduction under subsection 6(2) to account for gross weekly income of $55. The amount of income replacement benefit from August 12, 2004 is $329.35 per week.

3. Mr. Adami is entitled to interest on overdue weekly income replacement benefits from June 25, 2003 in accordance with section 46 of the Schedule.

4. Mr. Adami is not entitled to a special award.

5. The issues of entitlement to and amount of expenses is deferred.

Evidence and Analysis:

Background:

Mr. Hamid Adami immigrated to Canada from Iran with his wife and young child on January 26, 2002. He was 38 years old. He was sponsored by his older brother Gholam Adami under what the Citizenship and Immigration Canada forms describe as a “Family Business Application.” Gholam operated a transport company in Toronto which consisted of three to four trucks and three to six employees. At the time of the immigration application, Hamid worked for a trucking transport company in Iran. He was qualified to drive tractor trailers in Iran, however, most of his work was in management. The immigration application included a job offer from Gholam to Hamid to work for his company.

Hamid claimed income replacement benefits under section 4(3) of the Schedule which requires that the insured be entitled to start work under a “legitimate contract of employment.” Wawanesa’s main argument was that the job offer was not “legitimate” because Hamid did not have the qualifications to perform the work described in the contract of employment.

Mr. Watt described the motor vehicle accident as “modest.” On February 22, 2002, less than a month after his arrival in Canada, Hamid was a passenger in Gholam’s stationary vehicle when it was struck from behind three times. Initially, Hamid thought his injuries were minor. On March 1, 2002, Hamid started work for Gholam. He gradually worked less and less.

Hamid continued to complain of constant back pain and stopped work with Gholam completely on July 16, 2002. Gholam testified that it got to the point that Hamid was no help to him and he decided to let him go. On October 4, 2002, seven months after the accident, a CT scan disclosed that Hamid had a fracture of the L2 vertebra which had healed in such a way that the width of the spinal canal at that point was reduced by more than 50%. On August 12, 2004, Hamid underwent an 8-hour operation in which the L1-L2 disc was removed and the L1-L2 vertebrae were fused with bone from the rib and screws.

Hamid’s spinal canal space is no longer compromised, however, his back pain is the same. Since the surgery, he takes morphine in various forms daily, to deal with the pain.

Legitimate contract of employment:

Under section 4(3), an insured is eligible for income replacement benefits if he or she:

i. was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing, and

ii. as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment he or she was entitled to start under the contract.

As part of the immigration application process, Gholam submitted a written offer of employment to Hamid. The offer made by his company is dated March 2, 1999 and reads as follows:

This is to confirm that we offer you a job in our company with following term and conditions:

Position :) Truck-Tractor Operator

Salary :) C$ 27,600 per year

Duties :) General truck operation includes: assisting on management of business, basic maintenance of trucks, customer services, and driving.

Working Hours :) 48 hours per week

Vacation :) 2 weeks per year

Sick days :) 10 days per year [paid]

We will also provide temporary accommodation upon your arrival in to Canada until you find your own.

On its face, Mr. Adami was not qualified to do the job because he could not perform management or customer services because his English was weak. As well, he was not licensed to drive a truck in Ontario. Other than basic maintenance of trucks, he could not perform the duties outlined in the written contract of employment.

In Shemou and ING Insurance Company of Canada, (FSCO A04-001909, April 19, 2007), Arbitrator Wilson said this about the meaning of “legitimate” in section 4(3);

I do not accept, however, that a job offer has to be perfectly and completely drafted to be legitimate. It is not expected to set out job duties with the precision of a job description in a collective agreement. The framework for comparison is the day-to-day employment world, where jobs, often menial and low skilled, are offered and accepted on a handshake and a few words about hours and expectations and salary, not the world of formal employment contracts.

The key words used in the legislation are “legitimate” and “written.” Had the legislature wished to narrow entitlement further, it could well have employed more specific, limiting words. The clear concerns of the legislature are that the offer be legitimate - bona fide, and that it be reduced into writing at some point in time.

I agree that to determine whether a contract is “legitimate” it is not necessary to construe it as a formal employment contract. Rather, in deciding whether this contract is “legitimate”, I should determine what was in the reasonable contemplation of the parties when they entered this agreement.

Although he had experience in the trucking business, Hamid would not have helped his brother much until his English improved and he obtained a licence to drive trucks in Ontario. Hamid had no one, other than his brother, in Canada when he came. It is reasonable to conclude that it is implicit in the agreement that the brothers would work together with the expectation that Hamid’s English would improve so that he could take over more duties over time and obtain a licence to drive trucks.

I now consider the evidence as to whether this contract was legitimate.

Hamid did in fact work with Gholam. In the first few weeks after his arrival, Gholam helped Hamid establish his family. On March 1, 2002, Hamid started work. Gholam drove him around to introduce him to his customers. As well, Hamid did some minor maintenance on the trucks. He looked at the paperwork but with his limited English he was unable to help.

On April 1, 2002, Gholam’s company issued a cheque to Hamid for $1,280 on which Gholam noted “03-01 → 03-15 80 hours.” On July 16, 2002, Gholam’s company issued Hamid a cheque for $3,500. Hamid testified that one-third was for work, and the balance was a gift. He also testified that Gholam said one-half was for work and one-half was a gift. Gholam testified that he ended Hamid’s employment because it was not working out.

Hamid produced his Type 2 driving licence from Iran which allowed him to drive tractor-trailers in Iran. As well, he produced translations of Iranian documents which certified his experience as a “machine-mechanic technician” with a transportation company and that he had training in “interior electrical repair of heavy and semi-heavy trucks.”

Within a week of arriving in Canada, Hamid obtained a learner’s driving licence and he received his regular “G” licence a few weeks later. He received a “Z” endorsement to his driver’s licence on June 17, 2003, which allowed him to operate vehicles equipped with air brakes. He tried to obtain his “A” licence twice, which would have allowed him to drive a tractor-trailer, but he failed because his English was inadequate.

The evidence is persuasive that the brothers intended that Hamid learn English and obtain his licences so that he could work in Gholam’s company. I find that the contract of employment was legitimate.

Disability:

Hamid testified that he has constant back pain and that he takes morphine every day in the form of a patch and pills to deal with it. He walks with a cane and testified that he hasn’t done much since the surgery. Dr. Joseph Garber, a psychologist, reported to Wawanesa in February 2007, that Mr. Adami was not able to work full-time. Wawanesa did not argue that Mr. Adami was employable. I find that Mr. Adami cannot work in his brother’s company and that currently, he suffers a complete inability to engage in any employment for which he is reasonably suited by education, training or experience.

Causation:

Mr. Adami’s family doctor in Iran wrote that Mr. Adami did not have a history of back problems. Mr. Adami testified that his condition got worse after the accident with therapy and that he stopped treatments after 15 sessions. Dr. Blackman, an orthopaedic surgeon, reported to Wawanesa that it was difficult to understand how Mr. Adami could undergo spinal manipulation by a chiropractor in the presence of such a severe fracture and that it was doubtful that spinal manipulation would cause such a fracture. Wawanesa did not take the position that Mr. Adami’s fracture pre-existed the motor vehicle accident or was caused by something other than the motor vehicle accident. On balance, I find it likely that Mr. Adami’s disability was caused by injuries suffered in the motor vehicle accident.

Accordingly, Mr. Adami is entitled to income replacement benefits.

Amount of benefit:

The parties agreed that the weekly benefit is $329.35. The benefit is reduced to zero for the period March 1, 2002 to March 15, 2002 to account for Mr. Adami’s post-accident income. Thereafter, Mr. Adami received $3,500 from his brother up to July 15, a period of approximately 16 weeks. Hamid said one-third of this was for work he did. He testified that Gholam told him that one-half of this was for work he did. Gholam is a better judge of why he paid his brother and I find that $1,750 is for 16 weeks work, which is $109.37 per week gross. Wawanesa is entitled to a deduction pursuant to subsection 6(2) for the period March 15, 2002 to July 15, 2002.

Mr. Adami testified that after he stopped working for his brother, he delivered pizzas part-time. He also helped in the pizza store performing such tasks as grating cheese and cutting tomatoes. Although he was receiving welfare and had a duty to report his income, he did not declare his income from the pizza store to the welfare authorities or the income tax authorities. He described his hours as two, three to five-hour days per week, at $6 per hour plus tips. He testified that he worked 10 or 11 months and that he earned $3,500 to $4,000 gross in ten months, which after car expenses was $1,800 to $2,000 net. He also testified that he had pizza delivery income in 2002, which he did not declare. He obtained his “G” licence in March 2002. In September 2003, a doctor reported that he was working delivering pizzas and in June 2004 another doctor reported that Mr. Adami was very concerned about missing work after a proposed operation on his wrist. He also testified that he worked right up to the time of his back surgery in August 2004. The evidence Mr. Adami worked 10 to 11 months is inconsistent if he had pizza delivery income in 2002. Based on the evidence I heard, I find it more likely that Mr. Adami worked at pizza delivery from July 16, 2002, when he stopped working for his brother, to August 12, 2004, when he underwent back surgery. This is a period of approximately 108 weeks. I find that Mr. Adami minimized the amount of time he worked at delivering pizzas by about one-third. I therefore take Mr. Adami’s estimate of net post-accident business income from delivering pizzas and increase it three-fold to $6,000 or $55 per week for the period July 16, 2002 to August 12, 2004, for which Wawanesa is entitled to a deduction pursuant to subsection 6(2).

I have approximated the amount of post-accident income based on the evidence I heard. Mr. Cormack asked for a declaration of post-accident income on March 20, 2008, more than a year before this hearing. I may have made a more precise calculation of post-accident income if Mr. Adami had provided the information Wawanesa was entitled to.

If the parties cannot agree on the calculation of the amount of the deduction pursuant to subsection 6(2), they may make written submissions.

Special Award:

Under section 282(10) of the Insurance Act, I am required to make a special award if I find that the insurer unreasonably withheld or delayed payments. Mr. Watt argued that Wawanesa treated this claim as a scam from the beginning. The adjuster who handled this claim was present during the hearing, but no one called her to testify.

At the time of the accident, Mr. Adami’s English was not very good and he had no knowledge of any potential claims he had. He relied on others to help him. He signed an Application for Accident Benefits three months after the accident. The Application was completed by his chiropractor who did not speak Farsi, Mr. Adami’s first language. The Application indicated that Mr. Adami was “unemployed” at the time of the accident. The box indicating that Mr. Adami had a written agreement to start work was not ticked off.

Wawanesa assessed Mr. Adami based on this claim. Later, Mr. Adami made a claim for a caregiver benefit. Mr. Adami retained a paralegal in October 2002 that spoke Farsi. The representative did not recognize that Mr. Adami had an employment contract until he read that information in a medical report. On June 25, 2003, 16 months after the accident, the representative advised Wawanesa of the contract of employment and forwarded a copy to Wawanesa. The representative also advised Wawanesa that Mr. Adami had immigrated to Canada 28 days before the motor vehicle accident.

On July 15, 2003, Wawanesa wrote to Mr. Adami and his representative asking for the following:

Please be advised that we are unable to process your claim until we receive the following information as required under Section 33 of the SABS:

1. You have now changed your status from a Non-Earner and a Caregiver to having a contract of employment. The information presented is not a contract of employment. It is a document that was produced in 1999 for Immigration Canada from your brother who was acting as your sponser [sic] so that you may immigrate to Canada. We require you to supply us with documentation supporting that you qualify for the purported job. What degrees, certificates, qualifications, skills licensing do you possess to carry out the job as described to Immigration Canada? What is your education back ground? What is your job history?

Please note that the information must be provided to us within 14 days after receiving this letter. No benefits will be processed until you have complied with our request.

In view of the history of this claim, the initial claim for non-earner benefits and then caregiver benefits, the passage of 16 months before making a claim for income replacement benefits and the lack of information which explained Mr. Adami’s immigration process and the employment contract in any reasonable detail, Wawanesa’s request for information as set out in its letter of July 15, 2003 was reasonable.

All of this information was clearly identified, in the possession of Mr. Adami and could have been produced well before the hearing.

Although the tort defence lawyers had the immigration file, which showed Mr. Adami’s work experience, in December 2004, Mr. Cormack did not receive the file until shortly before the hearing. Mr. Cormack received the immigration application form on the first day of the hearing. He received the following documents during the course of the hearing: the translation of Farsi documents which showed Mr. Adami’s work experience in Iran; the pay cheques for the first two weeks of work and for work up to July 16, 2002; and Mr. Adami’s air brake endorsement on his licence

I find that Wawanesa could not have determined that Mr. Adami was entitled to an income replacement benefit based on a contract of employment until it had the information it requested and that its request for that information was reasonable. Since it did not have that information until shortly before or until the hearing, it did not unreasonably withhold or delay payment of benefits.

Interest:

Section 46 of the Schedule provides for the payment of interest.

46. (1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part.

(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly

Section 35 specifies when an income replacement benefit is due:

35. (1) On receiving an application for an income replacement, non‑earner or caregiver benefit, an insurer shall promptly determine whether a benefit is payable.

(2) If the insurer determines that a benefit is payable, the insurer shall pay the benefit to the person within 14 days after receiving the application.

The cases have generally held that payment of interest is compensatory, not punitive.

On June 25, 2003, Mr. Adami’s representative advised Wawanesa for the first time of the claim for income replacement benefits on the basis of the contract of employment. Therefore, income replacement benefits were due 14 days after June 25, 2003, which is July 7, 2003. Normally, Mr. Adami would be entitled to compensatory interest pursuant to section 46 from July 7, 2003 on overdue payments.

Mr. Cormack argued that no interest should be payable because Wawanesa did not disclose the probative documentary evidence relating to the contract of employment until the hearing. However, interest under section 46 is mandatory. As Arbitrator Wilson noted in Shemou and ING Insurance Company of Canada, (FSCO A04-001909, August 13, 2007), certain provisions in the Schedule, including section 33, have the effect of suspending an insurer’s obligation to pay a benefit when an insured is in breach of his or her obligations under the policy. However, Mr. Cormack argued that whether benefits should be suspended pursuant to section 33 was not in issue. I heard no argument as to which version of section 33 applied to this case and whether it applied. I find no authority for me to suspend the payment of income replacement benefits or disallow mandatory interest. Therefore, Mr. Adami is entitled to interest pursuant to section 46 on overdue payments from July 7, 2003 to the date of payment.

Expenses:

The parties asked that I defer the issues of entitlement to and amount of expenses of the arbitration proceeding. If they cannot agree on entitlement, either party may request an appointment pursuant to Rule 79.1 of the Dispute Resolution Practice Code (4th Edition).

June 10, 2009

William J. Renahan Arbitrator

Arbitration Order

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

1. Mr. Adami is entitled to income replacements benefits from March 15, 2002.

2. The amount of income replacement benefit from March 15, 2002 to July 15, 2002 is $329.35 per week less a deduction under subsection 6(2) of the Schedule to account for gross weekly income of $109.37. The amount of income replacement benefit from July 16, 2002 to August 11, 2004 is $329.35 per week less a deduction under subsection 6(2) to account for gross weekly income of $55. The amount of income replacement benefit from August 12, 2004 is $329.35 per week.

3. Mr. Adami is entitled to interest on overdue weekly income replacement benefits from June 25, 2003 in accordance with section 46 of the Schedule.

4. Mr. Adami is not entitled to a special award.

5. The issues of entitlement to and amount of expenses is deferred.

June 10, 2009

William J. Renahan Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.