Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 133 FSCO A09-001477

BETWEEN:

DAWN SMITH Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Edward Lee Heard: January 5, 7, 2010, April 20, 22, 2010, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions received June 6, 2010, July 14, 2010 and August 30, 2010.

Appearances: Patrick Mazurek for Ms. Smith Nicholaus de Koning for Economical Mutual Insurance Company

Issues:

The Applicant, Dawn Smith, was injured in a motor vehicle accident on July 6, 2006. She applied for and received statutory accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ Economical terminated weekly income replacement benefits on December 6, 2006. The parties were unable to resolve their disputes through mediation, and Ms. Smith applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Preliminary Matters:

The preliminary issue set out in the pre-hearing letter of Arbitrator Killoran was the following:

What is the amount of weekly income replacement benefit that Ms. Smith is entitled to receive from July 15, 2006 to September, 2009 pursuant to the Schedule?²

When the hearing commenced, the original preliminary issue was further subdivided into the following questions:

1. Should Economical be estopped from taking the position that Ms. Smith was a self-employed person for the purposes of determining her weekly income replacement benefit pursuant to the Schedule?

2. If the answer to question (1) is “no”, was Ms. Smith a self-employed person or an employee for the purposes of determining her weekly income replacement benefit pursuant to the Schedule?

3. If Ms. Smith is determined to have been an employee, what is the quantum of the weekly income replacement benefit she was entitled to receive from July 15, 2006 to September 2009, pursuant to the Schedule?

Therefore, before addressing whether Ms. Smith was an employee or self-employed, I must first decide whether Economical should be estopped from arguing that Ms. Smith was self-employed or an owner.

Result:

1. Economical is not estopped from taking the position that Ms. Smith was a self-employed person for the purposes of determining her weekly income replacement benefit pursuant to the Schedule.

2. Ms. Smith was an employee for the purposes of determining her weekly income replacement benefit pursuant to the Schedule.

3. The quantum of the income replacement benefit Ms. Smith was entitled to receive from July 15, 2007 to September 2009 is $400.00 per week.

Introduction:

Ms. Smith, a member of the First Nations, was working at a convenience store on a First Nations reserve when she was injured in a car accident. Following her accident, she made a claim for income replacement benefits from her insurer, Economical. Economical initially paid income replacement benefits to Ms. Smith, but later terminated those benefits when she did not provide Economical with financial information and documentation requested from her.

Ms. Smith claims that she was at all times an employee and manager of the convenience store, working for the owner, Joe Greene, also a member of the First Nations. Members of the First Nations are not required to pay income tax on income generated on a First Nations reserve. Further, they have a historical right to trade and sell tobacco products on the reserve, and First Nations entrepreneurs often conduct extremely lucrative businesses, selling cigarettes at a much lower price than can be found off reserve.

There is little written documentation in regard to the business. The First Nations people have always relied on an oral, rather than a written tradition. All sales, purchases, salaries paid to employees and transactions at the store took place on a cash basis. Furthermore, there was no requirement on the store’s owner to maintain financial records or pay taxes. Ms. Smith claims she was making at least $750.00 per week in her capacity as a manager, and should thus be entitled to an income replacement benefit of $400.00 per week.

Economical does not dispute that Ms. Smith met the medical definition for the disability test for the period in question. Instead, Economical claims that Ms. Smith was not a mere employee of the store. Economical suggests that Ms. Smith was in fact a part-owner, self-employed or had some other ownership interest. Statements made by Ms. Smith indicate she was an owner or self-employed. As well, Ms. Smith was not a mere employee because she and Mr. Greene were in a romantic relationship and not at arm’s length.

Finally, Economical submits that Ms. Smith’s claims are not credible because they are almost entirely unsubstantiated by written documentation. Economical also suggests Mr. Greene is not credible as a witness because of the “dubious morality” of his business activities selling and trading in tobacco products.

ISSUE IN DISPUTE:

The issue in dispute is whether Ms. Smith was an employee or an owner of the store.

This case turns entirely on credibility. If I accept the evidence of Ms. Smith, then she was indeed an employee and entitled to an income replacement benefit of $400.00 per week. If I accept the evidence of Economical, then Ms. Smith was an owner, self employed or had some other ownership interest in the store. In that case, any calculation of an income replacement benefit for Ms. Smith would have to be made by other means.

1. Should Economical be estopped from taking the position that Ms. Smith was a self-employed person for the purposes of determining her weekly income replacement benefit pursuant to the Schedule?

Ms. Smith argued that Economical should be estopped or precluded from now arguing that Ms. Smith was a self-employed person because Economical never previously advised Ms. Smith that it was taking this position. According to Ms. Smith, Economical failed to articulate this stance for over three years following her accident, and even its Response to the Application for Arbitration was “rather vague” in this regard. Thus it would be unfair to now allow Economical to claim that Ms. Smith had been a self-employed individual all along. Further, Economical also failed to meet its first party obligation to assist Ms. Smith in helping her understand her rights and to properly submit her claim for accident benefits.

In support of her argument, Ms. Smith relied on arbitral decisions which have recognized that arbitrators have the jurisdiction to apply equitable principles.³ She cited the following definition of the principle of estoppel:

...where one person (‘the representor’) has made a representation to another person (‘the representee’) in words or by acts and conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive), and with the result, of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto.⁴

Ms. Smith submitted that estoppel should be considered in conjunction with the consumer protection doctrine enunciated in the decision of Smith v. Co-operators General Insurance Co.,⁵ Given that Economical never explicitly told Ms. Smith that Economical was not accepting her employee status, Ms. Smith took no action to establish that she had not been self-employed. Further, as time passed, evidence that might have corroborated her status as an employee eroded and became unavailable. Finally, Ms. Smith relied on Economical’s position and lost her opportunity to make a re-election for caregiver as opposed to income replacement benefits.

Analysis:

I agree that arbitrators have the jurisdiction to examine equitable claims.⁶ I also agree that insurers are under a general and continuing duty to provide an insured person with assistance in regard to their applications for accident benefits.

Nevertheless, it is also clear that for estoppel to operate, Economical had to have made representations or engaged in some form of conduct which would have induced Ms. Smith to alter her position to her detriment. In the instant case, I am not convinced that Economical ever made such representations or engaged in conduct to induce Ms. Smith to believe that it had accepted her claim based on her status as an “employed” person.

For instance, the initial OCF-9⁷ responding to Ms. Smith’s claim for income replacement benefits stated that Ms. Smith was “eligible” for income replacement benefits at the rate of $400.00 per week, but also contained this following statement:

There is no benefit payable for the first 7 days following an accident as per section 5(2) (a)) of the SABS. Out of good faith, I have enclosed your first Income Replacement Benefit cheque in the amount of $4,057.14, which covers the benefit period from July 15, 2006 to September 24, 2006.

That OCF-9 was also accompanied by a letter which contained the following communication:

There is no benefit payable for the first 7 days following an accident as per section 5(2) (a)) of the SABS. Your benefit commenced on July 15, 2006 and is payable every 2 weeks while you continue to suffer a substantial inability to do the essential tasks of your employment. Out of good faith, I have enclosed your first Income Replacement Benefit cheque in the amount of $4,057.14, which covers the benefit period from July 15, 2006 to September 24, 2006.

Further to our conversation of September 14, 2006, you indicated that you did not have copies of pay stubs received since the accident and had no bank records either as you were paid cash. The following documentation will be needed in order to calculate your benefit:

1. Records of sales and revenues for the 52 weeks or last fiscal year completed prior to the accident.

2. GST returns for the 52 weeks or last fiscal year completed prior to the accident.

3. Copies of personal tax returns, tax schedules and notices of assessment for the 24 months prior to the accident.

4. Copies of all financial staments for the 52 weeks or last fiscal year prior to the accident.

5. Corporate tax returns plus all schedules and notices of assessments for the past 24 months.

6. Records of all expenses and bank statements.

Additional information or documentation may be required. The material will be reviewed and analysed by a qualified accountant. [emphasis mine]

The initial OCF-9 was followed by a second OCF-9⁸ dated December 6, 2006, which terminated income replacement benefits. This OCF-9 contained the following statement:

We have not received the requested information in accordance with section 33 of the SABS. As you have failed to return the requested information, your benefits claimed under section 4 have been stopped effective 06/12/2006 until the requested information has been provided.

In fact, no IRBs were paid following the initial good faith payment in September 2006 until the spring of 2009 when a second good faith payment was made following mediation after the filing of the Application for Arbitration.

Instead, the documentary record⁹ contains notes of face-to-face meetings with Ms. Smith, telephone communications, and letters where Economical or other parties engaged by Economical made persistent requests to Ms. Smith for financial, accounting, taxation and other business-related documentation.

Simply put, I fail to see how the denials in the two OCF-9’s, the termination of income replacement benefits and the repeated requests for financial documentation in the letters, communications and correspondence could be construed as Economical accepting Ms. Smith’s position that she was an employed person.

I also find that the issue of self-employment was raised in Economical’s Response to the Application for Arbitration. Although Economical could have been more unequivocal in the formulation of its argument, it clearly alleged in Schedule ‘A’ to its Response that Ms. Smith was the “apparent principal (or partner)”¹⁰ in the business in question. It also alleged that post-accident income for the store should be attributable to Ms. Smith.¹¹ These pleadings do indicate that Economical was alleging that Ms. Smith was a self employed person in the business in question.

Further, I did not find the facts in either of the decisions cited by Ms. Smith support her argument. In Passerello¹², an insured was paid income replacement benefits for approximately six years at the rate of $400.00 per week based on his information that he was an employee. The insured argued that he had been treated as an employee for this entire time and that the insurer should be estopped from arguing that he was a self-employed person at arbitration. The arbitrator held that evidence showed the insurer had never fully resolved the issue as to whether Mr. Passarello had been an employee or self-employed. The actions of the insurer did not signify that they had fully accepted that the insured was an employee. Ultimately, the insured was determined to be a self-employed individual by the arbitrator.

In Miller, the insured was also paid an IRB of $400.00 per week for over six years based on an employer’s confirmation of employment. When the insurer alleged fraud after six years and took the position that the insured had been self-employed, the arbitrator ruled that it was open to the insured to raise a defence of estoppel.

In both the cited cases, there was a long payment history by the insurer based on initial information that the insured was an employee. This is far from the situation in the instant case where an initial “good faith” payment made in July 2006 was followed by a termination of the benefit.

Further, I am not convinced that Economical’s actions somehow led to the erosion or loss of the financial records mentioned by Ms. Smith. According to her testimony, they were lost while she was moving, and I am not convinced that somehow Economical must bear the brunt of that accident.

In the present case, the repeated and persistent requests by Economical for financial documentation, the early termination of IRBs and the statements in the OCF-9’s convince me that Economical did not induce Ms. Smith to conclude to her detriment that Economical had accepted her self-declared status as an employee.

I find that Economical is not estopped from raising its argument that Ms. Smith was a self-employed individual.

2. Was Ms. Smith a self-employed person or an employee for the purposes of determining her weekly income replacement benefit pursuant to the Schedule?

Five witnesses testified at the hearing. The insured called Ms. Dawn Smith, Ms. Marion Murdoch (who was Ms. Smith’s mother), and Mr. Joe Greene.

The insurer called Mr. Jeff Cowan, adjuster for Economical, and Ms. Melissa Brown, an accountant from PricewaterhouseCoopers.

The Facts:

Ms. Dawn Smith began working at the “Corner Store on 4” in late February or early March of 2006. Her work was full time, from 40 to as many as 70 hours per week. The store sold cigarettes, blankets, clothes, souvenirs, trinkets and served hot meals. Her duties also required her to go on buying trips that lasted for days.

On July 6, 2006, Ms. Smith was driving her car when she veered off the road and struck a tree. The impact ejected her from the car and she was taken by ambulance to Hamilton General Hospital. Due to her many injuries, she spent approximately seventeen days in the Intensive Care Unit, and approximately ten more in recovery before being released from the hospital.

In the hospital, Ms. Smith was visited by Economical’s adjuster, and she underwent a first examination on consent¹³ on July 27, 2006. At a second examination on consent¹⁴ on August 21, 2006, Ms. Smith stated that she had been employed full time as the manager of the Corner Store on Four since the last week of February. Her employer and boss was “Joe [Greene]” who also owned the business.

Ms. Smith also indicated in her Application for Accident Benefits (OCF-1)¹⁵ that she was “employed and working” for her employer, Joe Greene. She agreed to allow Economical’s representatives to speak to her employer (OCF-16¹⁶), and elected to claim IRBs even though she was also a caregiver for two children at the time of the accident.

Early in the adjustment phase of this file, Ms. Smith provided a copy of her status card¹⁷ to Economical, and informed them that she was paid in cash and had no pay stubs.¹⁸ Ms. Smith also informed Economical that she did not possess the financial documents requested, and she described the tally and float sheets used to keep track of sales and employee work hours at the store. Despite her explanations, she continued to receive letters from Economical and its accountants¹⁹ from PricewaterhouseCoopers, requesting financial information.

In February 2007, Ms. Smith was interviewed at the store by two representatives of PricewaterhouseCoopers, hired by Economical to prepare an expert accountants’ report. Ms. Melissa Brown was one of the accountants. Mr. Joe Greene, Ms. Marion Murdoch and Mary-Ann, another employee of the store, were also present. The meeting lasted an hour-and-a‑half to two hours.

After the meeting, Ms. Smith received another letter²⁰ from the accountants requesting more financial documentation. No accountants’ report was ever produced by the representatives of PricewaterhouseCoopers, and Ms. Smith’s income replacement benefit was never re-instated.

Economical’s Argument:

Economical’s case is based entirely on credibility. It submitted that inconsistencies, contradictions and deficiencies in Ms. Smith’s testimony, the testimony of Ms. Smith’s other witnesses, and in the documentary record detracted from her credibility. As well, her testimony was almost completely unsupported by documentary evidence.

Before addressing the specific arguments raised by Economical, I make the following observations.

At the commencement of the hearing, Economical admitted that PricewaterhouseCoopers, its accounting experts, had been unable to formulate an accounting report or analysis in regard to the convenience store, or to pronounce an opinion in regard to Ms. Smith’s disputed status as an employee or as a self-employed person. No expert report was filed by Economical, and I allowed Ms. Melissa Brown, an accountant from PricewaterhouseCoopers, to testify solely in regard to events she personally witnessed during the meeting at the Corner Store on Four in February 2007.

I turn now to an analysis of Economical’s arguments, assessing the credibility of each of the witnesses as required.

Analysis:

1. The Lack of Written or Documentary Evidence:

Much of Economical’s argument stemmed from this general assertion that the lack of written documentation substantiating Ms. Smith’s claims concerning her job, job description, work hours, salary, and the business structure of her workplace was lethal to the credibility of her case.

According to Economical, the “search for truth” during the adjustment phase of the file and at the arbitration hearing was hampered by a fundamental lack of business records or documentation that would “normally” have been associated with the operation of a business venture such as the convenience store in question.

I was not convinced that a lack of written documentation necessarily detracted from the credibility of Ms. Smith’s case. It is trite to say that proof may be made by sworn testimony.

Ms. Smith testified at length. My overall impression was that her testimony was internally consistent despite a long, vigorous and at times, aggressive cross-examination by Economical’s counsel. I did not find that she was inconsistent, contradictory or evasive in her responses. Nor was her testimony so inherently improbable as to render it completely unbelievable. I found she answered all questions in a forthright, straightforward manner.

I also noted the record of Ms. Smith’s behaviour during the early adjusting phase of the file. Despite the injuries which necessitated her hospitalization for approximately seventeen days, Ms. Smith submitted to a first examination on consent while still in the hospital approximately three weeks after her accident. A second examination on consent took place during her convalescence at home. She was represented by legal counsel at neither examination²¹, and I will excerpt important sections of those examinations on consent at a later stage of this decision.

She also co-operated with Economical by arranging to have Mr. Joe Greene attend at Economical’s London office, and agreed to meet with the two accountants from Price Waterhouse Coopers at the store.

Although not determinative, I find that Ms. Smith behaviour from the onset demonstrated a willingness to co-operate and disclose all relevant information in regard to her claim. Her conduct was not suggestive of a person who was trying to hide or subvert the truth to obtain a benefit to which she was not legally entitled.

At the hearing, Ms. Smith, Mr. Greene and Ms. Murdoch testified that the store operated on a cash basis, and Ms. Smith and Mr. Greene testified as to the historical right of the First Nations people to conduct their commerce in tobacco products free of the taxes imposed on non-native tobacco sellers. All three testified as to the lucrative nature of the business and the store’s record-keeping procedures for cash, income, expenses, employee hours worked, travel and the nature of the work done.

Ms. Smith testified that the First Nations relied on an oral, rather than a written tradition, and this was corroborated by Mr. Greene. She also testified that it was easy to operate a business on a First Nations reserve; no permits or licences were required.

Economical adduced no evidence to rebut any of the testimony regarding the business practices and environment at the store and the traditions of the First Nations people. I found the evidence credible and trustworthy. Therefore, I find it perfectly reasonable and understandable that there was little in the way of the “normal” financial documentation in regard to the sales, purchases, and business operations at the store. Why would there be? There was no legal obligation on the store owner to pay tax on the income or to maintain business records.

I am also unconvinced that the lack of written documentation “hampered the search for truth” during the adjustment phase of the file, as suggested by Economical. Economical’s witnesses both testified they knew the First Nations peoples were not under the same tax obligations as non-First Nations people, and Ms. Brown testified she knew they would not receive the same type of business or tax information from First Nations businesses as they would from non-native business owners. Economical’s witnesses testified that they had been prepared to work “outside the box” to adjust the file.

2. The Lack of Documentation to Substantiate the Employer-Employee Relationship

Economical cited the lack of written documentation to substantiate the employer-employee relationship between Ms. Smith and Mr. Greene. Ms. Smith was unable to provide any form of workplace documentation, including a written employment contract, written job description, letter of employment outlining job duties, or anything to prove the relationship that existed between herself and Mr. Greene.

Again, I am not convinced that the lack of such documentation proved anything other than the business had few written records. Both Ms. Smith and Mr. Greene testified that they had known each other as friends for years before she commenced working at the store. Ms. Smith had previously been a caregiver for Mr. Greene’s children. The friendship was corroborated by Ms. Murdoch and I accept it as fact.

Mr. Greene testified that he didn’t bother to keep records at the store, including receipts for purchases made by his employees which he threw into the garbage.²²

I find that the lack of documentation for the employee-employer relation was consistent with the informal practices employed at the store as testified by Ms. Smith, Ms. Murdoch and Mr. Greene. Indeed, had Ms. Smith been able to produce a document detailing every duty, skill and competency required to perform her job, her exact hours of work, and a termination agreement and severance package, it would have been highly incongruent and grossly suspicious.

Further, the three witnesses testified that there were at least two other employees of the store. Ms. Brown also noted the presence of another employee at her visit to the store in February 2007. This was uncontested and I accept this as fact. No evidence was adduced that these other employees had written employment contacts, written letters of employment or written descriptions of their job duties. The fact that Ms. Smith also did not possess such documentation in no way detracts from her testimony that she was an employee at the store.

3. The Various Names for the Store

As a simple example of inconsistencies, Economical suggested that even the name of the convenience store was never properly established before me. The business was variously described in the Employer’s Confirmation²³ form signed by Mr. Greene as the “Company Store on 4 (Four)”, in Ms. Smith’s Examination on Consent²⁴ as the “Corner Store on Fourth”, in Ms. Smith’s Application for Accident Benefits²⁵ as the “Corner Store on 4” and finally in Ms. Murdoch’s testimony as “Ed’s smoke shop” or “Ed’s Store”.

Ms. Smith, Mr. Greene and Ms. Murdoch all testified the business in question existed long before Ms. Smith’s involvement. A commercial enterprise had previously been in operation on that site owned by another person, and Mr. Greene was originally in partnership with a woman named “Lila”. No evidence was led to contradict any of this.

Further, my impression was that Ms. Murdoch was also a credible witness. Her testimony was not contradicted or impeached during cross-examination. Nor was it so implausible as to be rendered unbelievable. Mr. Greene also testified in a credible manner although a specific challenge was raised against his credibility which I will address at a later stage of this decision.

I accept the evidence tendered by the witnesses in regard to the past usage of the store on the reserve, and I find no inherent difficulty in three witnesses using different names for the business. There was no evidence that the name of the store was displayed on a sign such as one might find at an outlet location of “The Bay” or “WalMart”. In fact, there was no evidence that the store had any sign whatsoever.

The discrepancy between the names given by Ms. Smith and Mr. Greene was so insignificant as to be meaningless (“Corner Store on 4” as opposed to “Company store on Four”). Ms. Murdoch gave an entirely different name: “Ed’s Smoke Shop”. Nevertheless, the testimony was that the store had previously existed under different incarnations. It is completely understandable that Ms. Murdoch, who also lived in the community, might have known the store by a different name. Further, Ms. Smith testified as to the ease with which one could open and operate a business on the reserve.

In fact, Ms. Smith’s misinformation in regard to the true name of the store actually supports her contention that she was an employee rather than an owner, as one would presume an owner would know the actual name of her own business.

Therefore, I find the fact that three different names were given for the store in no way rendered the witnesses less credible.

4. The Time Sheets Presented by Ms. Smith

Economical argued that the time sheets presented by Ms. Smith “raised more questions than they answered”. In fact, two sets of timesheets: one for the weeks ending Thursday, June 1, 2006, June 8, 2006, June 15, 2006 and June 22, 2006; as well as another set for the weeks ending Thursday, June 4, 2006, June 11, 2006, June 18, 2006 and June 26, 2006, were submitted by Ms. Smith to Economical.

In cross-examination, Ms. Smith was asked why there were two sets of time sheets for June 2006.²⁶ Ms. Smith answered that one was correct and one was “messed up”, which she attributed to the long hours she had worked and her extensive travel during those weeks.

Her response was as follows:

And if you notice the business end of it I was working pretty much from, like, 6 in the morning and I would get home around 12, 1 o’clock in the morning, cook, do whatever, get up and go. So there were times when I was tired when I was filling these out but the correct time sheets are in here.²⁷

In hindsight, Ms. Smith agreed that the timesheets could have been done better, but it seemed “inconsequential” at the time because she and Mr. Greene worked hand- in- hand, and he knew how much she worked and what she did. When there were errors, Mr. Greene would bring it to Ms. Smith’s attention.²⁸

Mr. Greene corroborated much of this testimony. He stated that Ms. Smith and another employee, Mary Ann, often completed their own timesheets. According to him, the timesheets were “informal”, and he didn’t have problems with the hours the employees worked so long as the money “jibed” at the end of the week. He stated he did not review the timesheets every week. He gave leeway, and everyone had a lot of lateral.²⁹

When cross-examined about recordkeeping at the store, he made this statement: “I got the meat, here’s your receipt, throw the receipt in the garbage. It’s not a formal business, we didn’t claim anything, you know. If you bought it, you sold it. You made money at it.”³⁰

He added this: “I don’t know like I say, as long as they are—as long as everybody got paid and nobody complained, I didn’t question it.”³¹

I did not find that producing two sets of timesheets for June 2006 rendered Ms. Smith unbelievable as a witness. It was uncontested that she worked long hours at the store, often travelling long distances on buying trips that lasted days. I find it entirely plausible that she might have erroneously produced two sets of time sheets of the month of June 2006, especially given the lackadaisical attitude expressed by Mr. Greene in regard to record-keeping.

5. The Conflicting Evidence about Ms. Smith’s Salary

Economical suggested that Ms. Smith gave conflicting and contradictory evidence in regard to her salary. At times, she reported she was making $700.00 per week. At other times she reported it was $750.00 per week. In one week she stated she made only $460.00.

When asked about the variations in her salary, Ms. Smith responded that she initially started at $700.00 a week, but once Mr. Greene learned how long her hours were, he raised her salary to $750.00. The weekly salary also varied if she spent less time at the store or travelled, which explained how in one week she only made $460.00.

Economical also argued that Ms. Smith never mentioned she was eligible for commission income in her testimony. Mr. Greene had testified Ms. Smith received additional income for the bulk sales of cigarettes.

Nevertheless, when cross-examined, Mr. Greene testified that the time sheets did not include the amounts made on commission. He added that Ms. Smith actually made more than $750.00 per week, but commissions were not included in the weekly pay.

Therefore, I do not find contradictions in Ms. Smith’s testimony about her salary. I accept her explanation that initially she started at a lower salary which increased later. I note too that the Confirmation of Employment form completed by Mr. Greene shows unequivocally that Ms. Smith made a salary of $750.00 per week.

6. The Statements in the Documentary Record Contradicting Ms. Smith

Economical argued that four statements in the documentary record contradicted Ms. Smith’s evidence that she was an employee. These statements suggested Ms. Smith was actually an owner/operator or self-employed. The statements are found in the reports of the occupational therapist, Ms. Jean Turgeon³², the psychiatrist, Dr. A. Zielinsky³³, another occupational therapist, Ms. Natasha Annett-Lawrence³⁴ and the family physician, Dr. Michael Monture.³⁵

In assessing these documents, I note first that none of the persons who created these reports testified before me. They were not available to be cross-examined. Second, the reports were not sworn statements. It was also not known what questions, if any, were put to Ms. Smith to elicit the answers given. Nor was it known whether Ms. Smith was given a chance to elaborate or to explain her answers. Further, the reports were not even verbatim transcripts of statements made by Ms. Smith. In some cases, it was impossible to tell whether the statements were made by Ms. Smith or whether they were conclusions or observations drawn by the examiners. Finally, I noted that although the reports were up to twenty-five pages in length, in each instance, Economical directed me to no more than a sentence or two in each report.

These deficiencies tended to reduce the probative value of these reports, and in each instance, Ms. Smith was able to rebut the assertions attributed to her or to provide a reasonable explanation for them.

For instance, the Occupational Therapy Pre-claim Examination Report³⁶ of Jean Turgeon contained the following statement:

She [Ms. Smith] owned and operated a local convenience store; the store sold a variety of items including local crafts and take-out foods.

When cross-examined, Ms. Smith refuted this statement. She stated Mr. Turgeon interviewed her in the hospital soon after her accident, and he mistakenly reported she was an owner operator of the store. According to Ms. Smith, Mr. Turgeon might have misunderstood because at the time, she was still in the hospital with Mr. Greene who was then talking of her becoming a part owner in the future. She was also on morphine during this period. She told Mr. Turgeon how she had built up the store and how she sometimes referred to the store as her own (because she considered it her “baby”), but she did not own it.

I find Ms. Smith’s explanation entirely reasonable. In cross-examination, she testified she felt the store was her “baby” because she had worked so hard to make it a success. I find it entirely possible that a person who has put great effort into a business success might refer to the business as “hers” or as her “baby” despite having no ownership interest. Further, Ms. Smith’s explanation was credible and corroborated by Mr. Greene. I accept it over the unsupported statement found in Mr. Turgeon’s report.

The second alleged contradictory statement was found in Dr. Zielinsky’s psychiatric examination³⁷ which took place in May 12, 2009. He recorded the following comment:

She [Ms. Smith] stated she had a common law relationship with a man that ended 4 and ½ months after the accident. He was her business partner and he left the relationship and took a new business partner. He sold her part of the business without telling her and she felt distressed concerning the financial repercussions.³⁸

In cross-examination, Ms. Smith also contradicted this statement. She remembered telling the doctor that four-and-a-half months after the accident, she was still dependant [on Mr. Greene] and it wasn’t until Christmas time of that year that “everything began to fall apart [with Mr. Greene].”³⁹ She also replied that she did not recall using the words “business partner” in describing Mr. Greene. Further, she remembered telling the psychiatrist that the idea of her becoming a business partner came about after her accident while she was still in the intensive care unit when her condition was still very poor.

Ms. Smith stated the following:

A: Well, there was a point when I was in the trauma ICU and my oxygen level was significantly reduced and it would crash. Everybody would just come running and, like, I was laying there. I knew [sic] could see everybody and everything but everybody would just come running and then like everything would just like go black and he [Joe Greene] was one of the only ones that was there every day at the time.

And I remember after a certain episode that had happened he was sitting there and he was talking to me and he told me: Well you know, once you get out of the hospital, you’ll be all right, you’ll be up and fine and no problem and, you know, we’ll be partners in this business and we’ll get it going and stuff like that.

It was—it was – in hindsight I see it as an incentive to get me better to get me—because, like I said, I was still in the trauma ICU at that point.⁴⁰

I find Ms. Smith’s explanation completely plausible and consistent with the testimony given by Mr. Greene and Ms. Murdoch. I do not find Ms. Smith’s testimony successfully impeached by the statement in the report of Dr. Zielinsky.

Ms. Smith was then questioned about the report⁴¹ of Ms. Annett-Lawrence, occupational therapist, (August 15, 2007) which contained the following comment:

Pre-MVA the client reported that she was a part owner of a corner Store and that since the accident she has been unable to work and has lost her partnership.

Ms. Smith responded as follows:

All I can say, sir, is that I considered that store my baby, my pride and joy. That doesn’t—like you could walk into a law firm that starts out one day, work there 50 years and had built it up yourself because of your reputation but at the end of the day when you leave you might consider that your firm because of what you’d done but at the end of the day, when you walk away, if it’s dissolved, that doesn’t mean you get the money.⁴²

And later:

I considered that my store and after my car accident as an incentive for me not to die, number one, and then number two, to get better he [Joe Greene] said: Because of everything you’ve done—that store wouldn’t be anything without you; you have to get better. Once you do, we will be partners and we’ll build it up.⁴³

Again, I accept Ms. Smith’s testimony and explanation over the unsupported statement of Ms. Annett-Lawrence.

Finally, Ms. Smith was questioned about the Catastrophic Impairment Report⁴⁴ of Dr. Monture dated April 17, 2009, which contained the following statement: “Currently she is unable to pursue her previous work as a sore [sic] owner/operator.”

In response, Ms. Smith stated the following:

The way I read that, that says read(sic) store owner or operator. I operated that store and I will not dispute that. I operated that store right from the minute I walked in there.⁴⁵

On further cross-examination, Ms. Smith had this response:

I can’t tell you what everybody else is saying. I can tell you that I considered it my store after he [Joe Greene] sat there and talked to me and said: You get better and that store is half yours, we’ll do this and we’ll do that and we’ll do that. And I can tell you everything that he said in that conversation when he was sitting at my hospital bed never come to fruition because I never gained profitably when the business was sold. I never got a profit from the business. All I got was my wage up until my car accident. I don’t know how many different ways I can say that but you can ask the questions. I can’t say it different. It was what it was.⁴⁶

Therefore, I find Ms. Smith’s explanations for the statement in Dr. Monture’s report entirely plausible and credible. I do not find her credibility impeached by the contents of that report.

I turn now to the two examinations on consent given by Ms. Smith in the period immediately following her accident. In contrast to the statements in the reports cited by Economical, these examinations are verbatim transcripts of her answers to questions put directly to her.

The following excerpt is from Ms. Smith’s examination on consent⁴⁷ of July 27, 2006, not three weeks after her accident:

Q. And were you employed at the time of the accident?

A. (inaudible).

Q. Full-time, part-time?

A. Full-time.

Q. And where were you employed?

A. At the Corner Store on Fourth.

Q. Okay, and what was your job there?

A. I was the manager (inaudible).

At the second examination on consent that took place in August 21, 2006, there was a more complete exploration of this subject:

Q. And what was your employment status?

A. I was employed. I was a manager.

Q. Is that a full time job?

A. Yeah.

Q. And where was that?

A. At the Corner Store on Fourth.

Q. Okay.

A. I worked an average anywhere from 40 to 50 hours a week because I managed the store.

Q. Okay.

A. So, I was always running and doing stuff.

Q. Um, now I just need some details about your job Dawn. Your employer was?

A. The Corner Store on Fourth.

Q. And who is your boss?

A. Um, I actually run it. Joe owns it.

Q. So this is Joe’s business?

A. Yeah.

Q. Were you in school, or taking any course at the time of the accident, Dawn?

A. No, does it count that I was (inaudible)?

Q. No, at the time of the accident.

A. Oh yeah, I was—I’m self-employed as a CPR instructor. [italics mine]⁴⁸

I find Ms. Smith’s statements in the two examinations on consent conducted by Economical’s representatives far more convincing and credible than anything in the snippets from the four reports cited by Economical. Not only are the statements detailed and in-depth explorations of the subject in dispute, the answers are consistent in both examinations, and also consistent with the testimony given before me at the hearing. The statements were also more contemporaneous (less than three weeks after the accident), than the excerpts from the reports, which were obtained in some instances, as long as several years after the accident.

7. Contradictory Statement in Mr. Jeff Cowan’s Adjusting Notes

Economical argued that Ms. Smith described herself as an owner of the business to Mr. Jeff Cowan, an adjuster of Economical, in a statement recorded in Mr. Cowan’s adjusting note of February 6, 2007.⁴⁹

The note reads as follows: “Clmnt(sic) indicated that she is a part owner of the business and she took a draw of $750.00/week prior to the accident. She is listed with her boyfriend on the lease also”.

Mr. Cowan was the only witness who appeared before me stating he recorded a comment made by Ms. Smith that contradicted her status as an employee. Mr. Cowan also testified that his impression that Ms. Smith was self-employed was based on the comments of Robin Haffner, another adjuster, and upon the report of the occupational therapist (Ms. Annett-Lawrence).⁵⁰

My evaluation was that Mr. Cowan was a credible witness, but it was clear that he had little or no independent memory of the conversation he detailed in his report. Nor did he clarify or give further details about his adjusting note in testimony. He did not testify as to the exact question put to Ms. Smith to elicit her answer. Nor did he clarify the answer Ms. Smith gave to his question.

In cross-examination, Mr. Cowan stated that although he tried to enter his adjusting notes as soon as possible after a conversation, a note might not practicably be entered into the adjusting record until several days had passed. It is clear from the notation in the adjusting note itself that Mr. Cowan entered the note on February 6, 2007, although the conversation actually took place on February 2, 2007.⁵¹

In considering the adjusting note of Mr. Cowan, I find it significant that Ms. Brown, the accountant hired by Economical, had a telephone conversation with Ms. Smith on February 5, 2007, one day before Mr. Cowan entered the notes of his conversation.

Ms. Brown’s notes of her conversation⁵² are as follows:

Company Store on 4

bank account- business bank stats

no bank account for business.

--had a partner- niece

--he was going to shut down

--consider the store hers—not sure.

Started on

Beg. of May—when she started running store

-smokeshop, 1meal 1day take-out

-she prepared food (aprox 400/day) for take-out

-she did all books

-hired in May-kind of doing books

-hired two others to help b/c of accident.

1 hr ½ away-near Brantford. [italics mine]⁵³

Ms. Brown’s notes, compiled several days after Mr. Cowan’s conversation, present a different picture. These notes record Ms. Smith stating that she was hired and began running the store in May. There is no mention of Ms. Smith owning the store, and Ms. Brown does not record Ms. Smith stating she considered the store her own.

Ms. Brown was asked to clarify these notes in her examination by Economical’s counsel:

Q. What do you understand as to who’s store it was?

A. We ... I wasn’t sure. Joe Greene’s or her mother’s.

I find that Mr. Cowan’s note contradicts the testimony of Ms. Smith, Ms. Murdoch and Mr. Greene, as well as Ms. Brown’s own testimony and her notes of her conversation with Ms. Smith. Mr. Cowan’s note also contradicts Ms. Smith, Mr. Greene and Ms. Murdoch concerning the lease, which all three stated was in Mr. Greene’s name. On questioning, Mr. Cowan stated he never saw the lease.

Given these concerns and the lack of contemporaneousness in Mr. Cowan’s note taking, I find the evidence in Mr. Cowan’s adjusting note less reliable than the testimony given by the other witnesses and by Ms. Brown and in Ms. Brown’s notes.

Therefore, I do not find that this single note successfully impeaches Ms. Smith’s testimony about her status as an employee.

8. Statements in Ms. Brown’s Notes

Economical argued that the notes of Ms. Melissa Brown suggested that Ms. Smith was self-employed rather than an employee. Further, Ms. Brown testified that Ms. Smith and Mr. Greene might not have been at arm’s length because they were boyfriend and girlfriend.

I do not find that Ms. Brown’s notes suggested that Ms. Smith was self-employed. Nowhere do they suggest Ms. Smith was self-employed. In fact, the conversation she recorded (which is excerpted above), suggests that Ms. Smith was not an owner at all. Ms. Brown’s own testimony was that she thought Joe Greene or Ms. Smith’s mother was the owner of the store. Furthermore, as Ms. Brown never provided an expert accounting report, she was not in any position to provide an opinion as to whether Ms. Smith was self-employed or an employee.

Ms. Brown testified she had little or no independent knowledge of her meeting at the store in February 2007 and that her notes⁵⁴ comprised the entire record of that meeting. Her notes do not record any questions about the personal relationship between Mr. Greene and Ms. Smith. Nor do the notes of her previous conversations with Ms. Smith refer to that relationship. Ms. Brown admitted that her notes of September 26, 2006⁵⁵, which mention the “relation to Joseph Greene” were merely “... just my own talking points that I [she] was going to speak to her [Ms. Smith] about.”⁵⁶ When asked where she obtained the information that Ms. Smith and Mr. Greene were in a personal relationship, she stated: “I don’t remember where I got that information from.”⁵⁷

The uncontested evidence of Ms. Smith, Ms. Murdoch and Mr. Greene was that the romantic relationship between Ms. Smith and Mr. Greene began only after Ms. Smith’s accident. Further, even if this relationship had predated the accident, I am not convinced that a romantic relationship between two parties means they cannot be in an employer-employee relationship. In any case, I accept the evidence that this relationship commenced after Ms. Smith’s accident, and this relationship did not result in her attaining some ownership status in the store.

Further, whereas Ms. Smith, Mr. Greene and Ms. Murdoch all testified that the store’s documents and financial papers were made available to Ms. Brown at the February 2007, meeting, Ms. Brown had no memory of that taking place. In general, where the accounts of the events of the February 2007 meeting differed, I tend to prefer the testimony of Ms. Smith, Mr. Greene and Ms. Murdoch over that of Ms. Brown. I make this ruling for the following reasons: First, the testimony of these three witnesses was consistent and corroborating. They remembered something taking place. Ms. Brown just had no memory of those events.

Also, all witnesses testified the meeting lasted from an hour-and-a-half to almost two hours. Ms. Brown’s notes of that meeting, her entire record, are scarcely more than a single page long, comprised of approximately 500 words. I found it astonishing that Ms. Brown would have attended a meeting of that duration and recorded no more than a single page comprising little more than five hundred words.

In testimony, Ms. Brown stated she was instructed by her superiors to “think out of the box” and to find other types of documentation and evidence to prepare an accounting report for this file. Going to the meeting, she knew few of the usual financial documents were available, yet she had a golden opportunity to visit the business in question and make an investigation herself. Her notes make no mention of questions she put to Ms. Smith or Mr. Greene or Ms. Murdoch. She does not document requesting financial statements, receipts, tally sheets or other evidence. She makes no note that documents were not presented to her despite her requests.

She had a full opportunity to investigate the relationship between Ms. Smith and Mr. Greene (a factor of utmost importance in Economical’s analysis of this situation), yet again, she was silent as to that important issue. In testimony, she admitted not remembering asking questions of Ms. Smith or Mr. Greene as to whether Ms. Smith was self employed or an employee.⁵⁸

Further, a licensed accountant, she had a chance to make inventory of and to verify the principle stock of the store, yet her notes are silent as to whether she even asked to see that inventory. Most surprisingly, her notes include this statement: “profit — each were paid a weekly pay cheque both dawn and joe and profits were put into stock except for Christmas $500” [italics mine]. This observation is utterly at odds with every iota of evidence adduced at the hearing. Every witness stated that the store operated on a cash basis.

I also noted that in cross–examination, Mr. Cowan admitted that the two examinations on consent, conducted by Economical, were not initially sent to the accountants. Despite this, Ms. Brown admitted all the documentation initially given to her indicated that Ms. Smith was an employee rather than self-employed. When asked why she attempted to do a self-employed calculation, she stated “I was obviously instructed to do that.”⁵⁹ [italics mine]

This comment in particular raised doubts as to Ms. Brown’s neutrality in the conduct of her investigation. Economical submitted that Ms. Brown had no motivation to be “less than accurate with keeping such notes”⁶⁰, but given her instructions, this might not necessarily have been the case.

If nothing else, I find that Ms. Brown failed in her attempt to “think outside of the box” at the February 2007 meeting. The important lacunae in Ms. Brown’s notes, her lack of any present memory of the meeting and her admissions render her account of those events far less reliable and credible than the accounts rendered by Ms. Smith, Ms. Murdoch and Mr. Greene.

9. Contradictions Between Ms. Smith’s and Ms. Murdoch’s Testimony

Economical submitted there were contradictions in Ms. Smith’s and Ms. Murdoch’s testimony. Ms. Smith testified she brought every scrap of paper and document she had to the February 2007 meeting in three boxes. Ms. Murdoch testified she had one box of documents at the store.

I do not find this was a significant discrepancy. The meeting occurred over three years before. Ms. Murdoch testified that the single box was the size of a banker’s box and it was full of receipts and papers and shifts.⁶¹ Ms. Smith testified there were three boxes but did clarify their size. Nevertheless, it is clear that both witnesses testified that many documents and a lot of paper work were brought to the meeting. Further, Ms. Smith also testified in her examination that she had kept everything in a “box”⁶²

Both witnesses were cross-examined at length about the boxes of documents at the meeting of February 2007. Ms. Smith ultimately ended up in possession of the documents, and it is entirely possible to me that she later placed the documents in three boxes as opposed to one large box. In any case, I find this a minor discrepancy that does not impeach the testimony of these witnesses.

10. Vague and Contradictory Statements about Cash Register Tapes

Economical submitted that the testimony about the type of documentation provided at the February 2007 meeting was “vague and contradictory”. Ms. Murdock testified that there were transaction or cash register tapes.⁶³ Ms.Smith had testified that although the store utilized a cash register, there were no cash register tapes in the machine and that the employees kept a running tally of sales and cash.⁶⁴ Mr. Greene testified that when employees purchased supplies that would be used in the store, the receipts for the purchases would be thrown out once the employee was reimbursed.⁶⁵

I am not convinced that this evidence was as “vague and contradictory” as suggested by Economical. Ms. Murdoch’s testimony was the following:

Q. and the box was full of papers, was it?

A. Yes, the daily receipts, the shifts, with the – and also included in each shift was anything that was paid out. There were also band (sic) in there.

And I—was pretty—almost – almost full, because all of the adding machine tape for the whole shift, for every transaction, was also wrapped in this—with the shift receipts and all of the pay-outs.

Q. When you say adding machine, were they cash register tapes?

A. Cash register tapes, yes sir, so each transaction during the day, whether it was revenue or an expense, was recorded on that, on the cash register tape.⁶⁶

I note that initially Ms. Murdoch referred to her documentation as an adding machine tape, and only on further prompting by Economical did she refer to the tape as a cash register tape.

Nevertheless, Ms. Murdoch never testified that she had worked or operated the cash register at the store. In fact, the testimony was she sometimes dealt with accounting matters for the store after hours at her home, and in preparation for the February 2007 meeting. Thus I am not entirely convinced that Ms. Murdoch could know whether she was working with an adding machine tape of a cash register tape. Further, the record keeping did not involve a lot of paper documentation as testified by Joe Greene. I do not find this discrepancy, whether Ms. Murdoch used an adding machine or a cash register tape significant.

11. The “Tainted and Dubious Legality” of Mr. Greene’s Business Practice

Finally, Economical argued that the evidence of both Ms. Smith and Mr. Greene was “tainted and coloured” by the “dubious legality” of the business operated by Mr. Greene. According to Economical, Mr. Greene operated in a “grey zone” in regard to cigarette sales, and thus I should apply the principle of ex diolo malo non oritur actio and refuse to allow recovery in this situation where the conduct of the claimant is tainted with criminality or culpable immorality.⁶⁷

First, I am not convinced that even if Mr. Greene’s business was in fact, “tainted and coloured” by “dubious legality”, this would necessarily impact on Ms. Smith’s evidence or recovery. There was no evidence that Ms. Smith engaged in the “tainted” activity alleged by Economical. It is unclear how this legal maxim would be applicable in the case of Ms. Smith, whose principle role in the business was to manage the convenience store.

Second, is it unclear that arbitrators would even apply this principle, given the statements of Director’s Delegate in the decision of Clipperton and Zurich Insurance Company:

There is judicial consensus that the ex turpi principle cannot be applied to a plaintiff in a personal injury case who claims damages based on unreported income, where the injury did not arise out of the plaintiff’s illegal or immoral activity.⁶⁸

In the present case, the injury did not arise out of any alleged illegal or immoral activity conducted by Ms. Smith. Therefore, the principle is inapplicable.

Nor am I convinced by Economical’s submission that the courts have hardened their approach, as suggested by the decision in Terrier v. Haddow. In that decision the judge considered whether he should allow a waitress who had previously underreported her income to add her tips back to her income in her claim for loss of future income. Although the judge considered the ex turpi causa principle, he did not apply it in that case: “I see no sufficient reason to prevent the jury from taking into account any money they find the plaintiff to have made in the past when they are determining her loss of future income.”⁶⁹

Finally, I am not even convinced that Mr. Greene’s behaviour was so “tainted” as to lead to a contemplation of the ex turpi principle. Economical made contradictory submissions about Mr. Greene’s credibility. On one hand, when discussing his business activity, his testimony was “very candid”⁷⁰ and on the other hand, it was “less than forthright.”⁷¹

In my opinion, Mr. Greene’s testimony about his business enhanced, rather than detracted from his overall credibility. As in all his testimony, he was straightforward and forthright in his answers, volunteering, rather than seeking to hide the truth. There was little or no subterfuge in his statements throughout, and that lent credence to all the testimony he made before me.

Further, I find that that Economical mischaracterized the testimony given by Mr. Greene. It is unclear exactly what “illegal activity” Economical alleges. Nor is there any evidence that any person, including Mr. Greene, broke a law or was ever convicted of any offence under the Criminal Code. In fact, Mr. Greene’s testimony was that he had never been fined or pulled over. The evidence was that the First Nations people had the right to transport and trade in tobacco by treaty. Economical adduced no proof that this was somehow illegal or immoral.

Mr. Greene testified there was a “grey zone” when one dealt with the transport of cigarettes. Nevertheless, the fact that this “grey zone” (which may have amounted to nothing more than a violation of the Highway Traffic Act) existed does not lead me to conclude that I would invoke the principle cited above even if it were applicable to this case.

CONCLUSION:

This case was based entirely on credibility. Five persons testified before me over the course of four days of hearing. Almost all the testimony given by Ms. Smith, Ms. Murdoch and Mr. Greene was consistent. The inconsistencies and contradictions pointed out by Economical were insignificant or reasonably explained.

The credibility of Ms. Smith was not impeached by statements attributed to her in the reports cited by Economical. In every case, the makers of those reports did not appear before me to be questioned or to clarify or elucidate their notes. The statements were unsworn. In several cases they were not even made my Ms. Smith.

I found more credible the examinations on consent wherein Ms. Smith made full answer in regard to her status as an employee.

Finally, I found Economical’s two witnesses were less credible and reliable than Ms. Smith and her witnesses. Mr. Cowan, an adjuster and the only witness who testified as to a contradictory statement made by Ms. Smith, had no independent memory of the statement and entered his notes four days after the conversation took place. Ms. Brown was also unreliable as a witness.

I thus accept the evidence tendered by Ms. Smith, Ms. Murdoch and Mr. Green, and I find that Ms. Smith was at all relevant times, an employee of Mr. Greene, working as a manager at the corner store at the First Nations reserve.

Ms. Smith’s Income Replacement Benefit:

Having determined that Ms. Smith was indeed an employee, I now turn to the quantum of her income replacement benefit, and refer again to the decision of Clipperton and Zurich:

FSCO adjudicators have taken the same approach to undocumented income. The leading case is Mills and Canadian General Insurance Company, where Director’s Delegate Draper set out the following principles:

In many cases, calculating the insured person’s weekly income benefits with precision may be impossible. People do not keep records designed to calculate average gross weekly income in the four and 52 weeks preceding an unexpected event. In my view, therefore, it would be inappropriate to limit the insured person to minimum weekly income benefits in every case where his or her pre-accident income cannot be determined precisely. The goal should be finding a reasonable basis for making the calculation, not punishing poor record keepers. Consequently, I accept that in cases where the financial records are incomplete, the arbitrator has considerable scope to decide whether the evidence is sufficient to establish, on a balance of probabilities, that the person’s pre-accident income was at least a certain amount above the minimum. [italics mine]

However, there is a limit to the arbitrator’s ability to “fill in the gaps.” In Kahkesh and Lloyd’s Non Marine Underwriters, (August 19, 1992, OIC P-000378), an early appeal decision, the Director held that a self-employed applicant has the onus of providing reliable evidence of his pre-accident income, including both his revenue and expenses. This approach has been followed in many subsequent cases. There is flexibility in the manner that an insured person can prove his or her claim, but the arbitrator must have some reliable basis for calculating the benefits.

This has been the consistent approach of FSCO adjudicators.

Although the decision reflects the arbitrator’s impatience with Mr. Clipperton’s claim, it does not, in my view, go so far as rejecting the claim just because documentary evidence was lacking. FSCO adjudicators have allowed flexibility in proof of income, but they have insisted that the insured person bears the burden of establishing, on a balance of probabilities, a reliable basis for calculating the benefits claimed. This is difficult without documentary evidence.

In the present instance, I also distinguish between “poor record keepers”, who have perhaps conveniently neglected or forgotten to keep accounts of their tips or other income, and those like Ms. Smith, who are under no obligation whatsoever to pay taxes or keep records at all.

There are few written documents to substantiate Ms. Smith’s claims of her income, but there are the tally sheets she submitted as well as the confirmation of employment prepared and signed by her boss, Mr. Joe Greene. There is also the corroborative evidence of Ms. Murdoch and Mr. Greene as to the lucrative nature of the business, as well as Ms. Brown’s evidence that the store in question was a going concern and that it was generating income.

In the circumstances, I find the oral evidence of the witnesses and the documents tendered reliable. I find Ms. Smith made at least $750.00 per week in her position as an employee, managing the Corner Store on Four. I find Ms. Smith’s income replacement benefit should be $400.00 per week for the period in dispute.

EXPENSES:

The parties did not make submissions on expenses and I leave that issue to the arbitrator hearing this matter on the merits.

November 22, 2010

Edward Lee Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 133 FSCO A09-001477

BETWEEN:

DAWN SMITH Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

ARBITRATION ORDER

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

1. Economical is not estopped from taking the position that Ms. Smith was a self-employed person for the purposes of determining her weekly income replacement benefit pursuant to the Schedule.

2. Ms. Smith was an employee for the purposes of determining her weekly income replacement benefit pursuant to the Schedule.

3. The quantum of the income replacement benefit Ms. Smith was entitled to receive from July 15, 2007 to September 2009 is $400.00 per week.

November 22, 2010

Edward Lee Date Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Pre-hearing letter of Arbitrator Killoran dated December 7, 2009
3. 3Miller and Optimum Insurance Company Inc., (FSCO A07-000214, December 20, 2007) and Passarello and Wawanesa (FSCO A08-000533, October 16, 2009)
4. 4Pannenbecker v. Dominion of Canada General Insurance Co. [1978] A.J. No. 499
5. 5Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129
6. 6Miller, supra
7. 7Exhibit 1, Tab 13 at page 1
8. 8Exhibit 1, Tab 25
9. 9Exhibit 1, Tab 16, Tab 22, Tab 28
10. 10Schedule ‘A’: Response to Application for Arbitration at paragraph 11
11. 11Ibid at paragraph 13
12. 12Passarello supra
13. 13Exhibit 2, Tab 3
14. 14Exhibit 2, Tab 5
15. 15Exhibit 2, Tab 9
16. 16Exhibit 1, Tab 3
17. 17Exhibit 2, Tab 8
18. 18Exhibit 3, Tab 1, Page 15
19. 19Exhibit 1, Tab 16
20. 20Exhibit 1, Tab 28
21. 21Examinations on Consent, Exhibit 2, Tabs 3 and 5, dated July 27, 2006 and August 21, 2006
22. 22Transcript of Joe Greene at Page 110
23. 23Exhibit 2, Tab 6
24. 24Exhibit 2, Tab 3
25. 25Exhibit 2, Tab 9
26. 26Timesheets Exhibit 3, Tab 2
27. 27Transcript of Dawn Smith January 7, 2010, at page 262
28. 28Transcript of Dawn Smith January 7, 2010, at page 262-263
29. 29Transcript of Joe Greene, page 99
30. 30Transcript of Joe Greene, pages 110-111
31. 31Transcript of Joe Greene, page 107
32. 32Occupational Therapy Pre-Claim Examination Report, Jean Turgeon, Exhibit 4, Tab 20, Page 7, July 21, 2006
33. 33Insurer Examination, Dr. A. Zelinsky, August 11, 2009, Exhibit 5, Tab 35, Page 6
34. 34Insurer’s Examination — Occupational Therapy Pre-Claim Examination Report, Ms. Annett-Lawrence, Exhibit 4, Tab 31, Page 2
35. 35Catastrophic Impariment Report, Dr. Monture, Exhibit 4, Tab 33, Page 2
36. 36See footnote 32, supra
37. 37Psychiatry Report, Dr. A. Zielinsky Exhibit 5, Tab 35, August 11, 2009
38. 38Ibid at page 6
39. 39Transcript, Dawn Smith at page 255
40. 40Transcript of Dawn Smith’s Testimony, January 7, 2010, page 256
41. 41Insurer’s Examination , Ms. Annett-Lawrence, Exhibit 4 tab 31, August 26, 2007
42. 42Transcript January 7, 2010, Dawn Smith at page 290
43. 43Ibid page 290
44. 44Exhibit 4, Tab 33 at Page 23
45. 45Transcript January 7, 2010 page 292
46. 46Transcript January 7, 2010, page 296
47. 47Examination on Consent dated July 27, 2006, Exhibit 2, Tab 3 at Page 4
48. 48Examination on Consent, August 21, 2006
49. 49Adjusting note of Jeff Cowan, Ex. 3, Tab1, Supplementary Brief at page 10
50. 50Transcript Jeff Cowan April 22, 2010 at Page 11
51. 51Exhibit 3 Tab 1, Adjusting note page 11
52. 52Exhibit 3, Tab 1 notes of Melissa Brown page 44
53. 53Ibid.
54. 54Exhibit 3, Tab1, Page 37
55. 55Exhibit 3, Tab 1, Page 61
56. 56Transcript of Melissa Brown, page 150
57. 57Transcript of Melissa Brown, page 203
58. 58Transcript Melissa Brown at page 128
59. 59Ibid., at page 148
60. 60Submissions of Mr. de Koning May 25, 2010, at page 7
61. 61Transcript Marion Murdoch, Page 31
62. 62Transcript Dawn Smith, Page 263
63. 63Transcript Marion Murdoch, Page 32
64. 64Transcript Dawn Smith, Page 279
65. 65Transcript Joe Greene, Page 110
66. 66Transcript Marion Murdoch, Page 31
67. 67Arguments of Mr. de Koning May 25, 2010 at page 9
68. 68(FSCO P01-00008, August 24, 2001), Appeal Order at page 8
69. 69Tennier v. Haddow 2008 CanLII 5647 (ON S.C.) at page 3
70. 70Argument of Mr. de Koning May 25, 2010, at page 9
71. 71Argument of Mr. de Koning June 1, 2010, at page 5