Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 77

FSCO A09-000008

BETWEEN:

TRISTA POUTNEY

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Rosemary Muzzi

Heard: November 16 and 17, 2009 and January 4, 5 and 6, 2010, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Steven Foster for Ms. Poutney Daniel Strigberger for Economical Mutual Insurance Company

Issues:

The applicant in this matter is the daughter of the insured. The insured died in a motorcycle accident on August 17, 2006. The applicant applied for statutory accident benefits from Economical Mutual Insurance Company (“Economical”), as a dependant of the insured, under section 25 the Schedule.¹ Economical denied her these benefits. The parties were unable to resolve their disputes through mediation, and Ms. Poutney 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 the applicant entitled to a death benefit pursuant to section 25 of the Schedule as a dependant of the insured?

Result:

1. The applicant was a dependant of the insured and is therefore entitled to a death benefit pursuant to section 25 of the Schedule.

LAW AND JURISPRUDENCE

The relevant portions of section 25 of the Schedule provide for the payment of death benefits to each of the insured person’s dependants.

The Schedule states that a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person’s spouse.²

The parties agree that in this case the year preceding the accident is the appropriate time period for determining whether the applicant’s circumstances illustrated financial dependency. The accident occurred in August 2006, so the evidence was focussed on the period from August 2005 to August 2006.

The question of dependency has been examined by the Courts at various levels and by arbitrators. Decision makers have agreed that the issue of dependency is a question of fact. In Miller v. Safeco Insurance Co. of America³, the Ontario Court of Appeal confirmed this approach to determining dependency: each case will be approached on its own facts and with the legislative intent in mind and proper consideration given to these factors: the amount and duration of the financial and other dependency, the financial or other needs of the applicant, and the ability to be self supporting.

Decision makers have further detailed these factors, deriving the nuances from the particular circumstances before them⁴:

• The applicant must primarily derive his or her financial support from the person rather than from other sources;

• The dependence must be financial;

• Financial support includes the concept of money’s worth or the reasonable value of goods and services provided and exchanged;

• The determination of the nature and degree of dependency is one of fact and requires an assessment of all of an applicant’s particular circumstances at the time of the accident. However the applicant’s position cannot be determined solely by a single snapshot of circumstances at that date;

• While the ability to be self supporting is a relevant criterion, nothing in the Schedule suggests that this must be measured with reference to living at a subsistence-level;

• What is the person’s capacity to meet their own needs and can they meet 51% of their own needs with money already available to them apart from the other financial support⁵;

• The overriding principle governing interpretation of the dependency provisions is that the benefits legislation is remedial and as such should be accorded a broad and liberal interpretation that best meets its objectives.

SUBMISSIONS

The applicant argues that she was principally dependent on her father, the insured, in the year prior to his death. She had returned to full-time education with his blessing and support and he had undertaken to assist her in any way that he could and that included paying rent, paying off her Visa bill, helping with other expenses and promising to pay off the Ontario Student Assistance Program (OSAP) loan.

Economical argues that the applicant had sufficient means to pay over 50% of her financial needs during the relevant time. While her father may have been providing her with financial support, because of the OSAP loan and the money she earned at a part-time job the applicant was not principally dependent on the insured. Economical asserts that I assess the applicant’s ability to limit her expenses according to her means: it argues that I have to consider that a student should be living like a student, not in the manner the applicant lived.

EVIDENCE AND ANALYSIS:

Credibility Of Applicant

Though not disputed in its entirety, the credibility of portions of the applicant’s account was challenged by Economical. I find that the applicant’s credibility is not affected by perceived inconsistencies between her oral testimony before me and the transcript of a recorded interview with an insurance adjuster on August 23, 2006. I find that the transcript of the recorded interview is unreliable and is therefore an inappropriate basis upon which to impugn the applicant’s credibility. I so find for several reasons. First, I was unable to accurately compare the applicant’s oral testimony to her answers to the interview questions because I did not have a full transcript of the interview and I could not make out the spoken answers of the interview from a recording given its poor quality. Second, the evidence indicates that the circumstances under which the interview occurred were stressful and difficult for the applicant. She had just returned from being questioned in an OPP investigation concerning her father’s motorcycle accident, the fatal accident having occurred just one week before. Third, the applicant testified that she was not completely aware of the purpose for which the interview was being conducted and its significance to her case and therefore may not have been as clear and as accurate in relating her circumstances and I accept this explanation.

More generally, I find the applicant’s testimony credible and trustworthy because it made internal sense and coincided in the main with the oral evidence of the other lay witnesses and the documentary evidence before me.

Findings

As indicated above, the question of whether the applicant was a dependant of the insured is one to be determined on the particular facts of the case within the context of the intention of the legislation. The parties agreed that the relevant period for this determination was the year before the insured’s death, from August 2005 to August 2006. Therefore, an assessment of the particular facts in this case requires an assessment of the circumstances of that time.

The applicant’s case rested in large part on proving the intention of her father to support her in her return to school and particularly during that year prior to his death. Economical questioned the credibility of that assertion arguing that the insured did not have the means to support his daughter, that she had been and still was capable of supporting herself, and that she lived, in that period, like someone who was not dependent on others for her support.

Having considered all the evidence, I find that there are some fairly basic indicia of a relationship of financial dependence between the applicant and her father in the year prior to his accident. As a result, the applicant is entitled to benefits pursuant to the Schedule. My conclusion rests on an assessment of the applicant’s expenses and income. I deal with each category of support offered below.

Expenses and income

The applicant’s expenses for the year in question totalled $32,732.75. The applicant collected all of her financial records for the relevant period and created a schedule of expenses⁶ that also calculated the monthly contributions made by her father and herself. The applicant testified that if the amounts to pay her expenses did not come directly out of her account, then she knew that her father had paid those particular expenses because she had no other source of income. Further, where she saw that large sums had been deposited she knew that those amounts came from her father for the same reason. I accept the applicant’s schedule as a reliable tool for assessing her income and expenses and her additional oral testimony in this regard as credible.

The applicant’s expenses in this period included items such as rent, tuition, cell and home phones, gas, personal hygiene, food, cable, clothing, car expenses, insurance and bank and Visa fees. Of particular note, the applicant’s rent was $850 monthly for this entire period and the applicant also had over $2,500 in clothing expenditures during this time.

The applicant’s own income in the period from August 2005 to August 2006 totalled just over $10,000. At the time of the accident and in the year prior, beginning in September 2005, the applicant was working only part-time hours. She had a full-time job before deciding to return to school. She had believed that she could continue on full-time hours even after she commenced her college program. In fact, she was unable to maintain such a work schedule. The evidence shows that the applicant earned in 2004 twice the money she earned in 2006. In my view, the fact that the applicant could only maintain part-time work hours indicates in part her inability to be self-supporting during this time.

The applicant’s schedule of expenses shows that she contributed $10,175.73 to her expenses. It also shows that her father contributed a total of $14,667.27. Once the applicant’s contribution is accounted for, there is over $22,000 of expenses to make up for. It appears from the schedule of expenses that the difference is partly made up by her father’s contribution of close to $15,000. While the insured’s contribution is not over 50% of what the applicant requires to meet her expenses, it is close to half and represents 50% more than that which she contributed herself to her expenses.⁷

The OSAP loan

The applicant received an OSAP loan for the amount of $10,594, which she received in two instalments, at the beginning of the school year in 2005 and then at the beginning of 2006, but her satisfaction of a previously existing debt all but reduced the OSAP monies to zero. The pre-existing debt was in the form of an IOU in the amount of $9,590 to satisfy the applicant’s April 2005 purchase of a motorcycle. She paid $5,600 toward this debt in September 2006 and the remaining $2,990 in February 2006. These debt payments appeared to coincide with her receipt of the OSAP instalments. Further, in early 2006, the applicant went on a one-week winter vacation for which she borrowed back $1,000 from the vendor of the motorcycle.

Economical argues that the addition of the OSAP funds to the applicant’s income would bring her contribution to well above 50%. Further, the purchase of the motorcycle added to her otherwise profligate monthly expenditures showed her to be a person who lived well beyond her needs and her means. These considerations should lead to the conclusion that the applicant was not principally dependent on anyone else for her support.

I find that the OSAP loan is not to be viewed as income in the calculation of the applicant’s contribution to her expenses because I am persuaded that her father intended to pay off this loan as his contribution to his daughter’s education. The credible evidence before me is that the insured promised to pay back his daughter’s OSAP loan and to do so prior to the interest period commencing. His support for his daughter’s return to school and his intention to assist her financially are both corroborated by other oral testimony before me.

The insured’s former employer testified that the insured had most recently worked on and off from April 2005 to May 2006 as a truck driver hauling fuel for his transportation company and earned $16,400.10 in that time. He testified that the insured insisted on being paid on time because he had promised his daughter help with her college tuition, her rent and groceries. He also testified that in order to facilitate such support, the insured left his bank card with the employer so that deposits could be made into his account when he was out on the road. The applicant had a secondary card that allowed her access to her father’s account.

The insured’s former sister-in-law also testified that the insured was proud of his daughter’s decision to return to school and intended to support her by whatever means he could. She testified that she visited with the insured at the end of July 2006 and he told her that he was going to pay his daughter’s rent and Visa bill while she was at school. She also testified that he told her that he had wanted to return to work in late July 2006 so that he could pay off his daughter’s OSAP loan.

Economical submits that even if I find that the insured promised to pay the OSAP loan, the finding with respect to dependency does not change. While the applicant received the money during the relevant time, the loan was not due to be paid during the year and therefore did not need to be paid. In my view, Economical’s suggested approach to this consideration is too rigidly mathematical and restrictive in the context of this case.

I view the insurer’s intention/promise to pay the OSAP loan as a significant commitment to the applicant’s financial support that had an impact on the applicant’s budget and financial activities throughout the year. I find that the applicant lived like a person who expected a lot of money to be available to her despite the fact that she earned very little. Indeed, the applicant admitted as much under oath. She agreed that she took advantage of her father’s generosity, but believed herself entitled to it because he told her that he owed it to her and he never objected to her expenses. The applicant testified that she never felt herself in a financial crunch because she had her father to help and if he had not given her money she would have made other choices. In fact, her father accompanied her to purchase the motorcycle and never raised the money as an issue. She spent money on clothes to fit in and look the part given that in her program she had to attend at Small Claims Court. She testified that she has issues with her feet so she purchased expensive shoes to accommodate those issues. Moreover, she did not look for a second job because her father was adamant that she concentrate on school.

I also agree with the applicant’s submission that if the insured had made a direct payment of $10,000 towards the applicant’s tuition, it would not have been attributed to her and likely would have been considered a factor demonstrating her dependence on him. It would therefore be unfair to treat the insured’s promise to pay that amount differently simply because it is a deferred payment.

In this regard, I am guided by the comments and analysis in a more recent Ontario court case. In The Personal Insurance Company v. Allstate Insurance Company⁸, the Court considers the treatment of a scholarship in the assessment of the dependency on his parents of a student. The Court focusses on paragraphs 7 and 8 of O’Brien J.’s decision in Miller v. Safeco Insurance Co. of America which state:

In my view, it would be preferable to approach the question of this interpretation [of dependency] on the basis of the legislation was of a remedial nature, intended to broaden insurance coverage to include members of family units as persons insured under the policy.

Obviously, cases of this kind will be approached on their own particular facts. In my view, however, in considering who is an insured person, the legislative intent should be kept in mind and, in addition, matters such as the amount and duration of the financial or other dependency, the financial or other needs of the claimant, the ability of the claimant to be self-supporting ... should be considered.

The Court then goes on to find in the circumstances of the case before him that

The issue here, however, involves a scholarship with reference to the requirement of “principally dependent”.

The analysis is not based simply on cash flow. Including a scholarship, or, indeed, student loans as in one case mentioned, effectively eliminates all university students from their parents’ insurance coverage. This would be contrary to the principles enunciated by Miller. The legislative intent was to broaden insurance coverage, not restrict it to the named insured. (Emphasis added)

Moreover, in the case before me, there is the additional evidence that the insured’s payment of the OSAP loan was never intended to be deferred because he intended to pay it off before interest accrued and took concrete action to gather the funds to pay off the loan within that very year by selling one of his cars.

The Camaro

The applicant testified that her father offered up his Camaro for payment of the OSAP loan. The car went up for sale in August 2006, before she had finished her college program.

Much evidence was led about the insured’s 1980 Camaro Z28 as related to its value. The evidence led from the applicant about the Camaro was meant to lend credence to the claim that her father had a valuable car that he planned to sell to cover off her OSAP loan. Economical contested the worth of the vehicle through its appraiser witness.

The evidence was that the insured’s former employer became the putative owner of the vehicle for some time as he received it in payment for several financially costly mistakes made by the insured in his job. The employer had restored the vehicle with the assistance of the insured and testified that the vehicle was worth between $20,000 and $25,000. It appears from all of the evidence that the car’s restoration was actually a series of modifications to make the vehicle suitable for racing including the addition of a very expensive and powerful motor and other after-market accessories. Both the applicant and Economical also adduced evidence about the worth of the car through their respective appraiser witnesses.⁹

In my view, the actual worth of the Camaro is less relevant in this context than the insured’s belief about the value of the car. The insured and his former employer had invested a lot of money and time into the car and believed it to have attractive selling features. The August 10, 2006 classified ad placed in respect of the car listed the price at $15,000. The evidence shows that the insured had some reason to believe that his car could sell for that amount either as a car for racing or for its valuable parts. More significantly, the fact that he listed it for $15,000 and did so before the end of his daughter’s program adds further support for the contention that he intended to assume all responsibility for paying the OSAP loan his daughter took on.

Other indicia of financial dependency

There are also other contributions the insured made to his daughter’s support that, in combination with those listed above, rendered her primarily financially dependent on her father during the relevant time.

I find that the insured gave his daughter exclusive use of one of his other automobiles, a Grand Am, in 2004. She continued to have use of it during her college years. The insured paid the insurance.

I also find that whereas the applicant had previously rented a one-bedroom apartment, she rented a two-bedroom apartment in Brampton a few months before she began her school year to share with her father and with parking to accommodate the car that he gave to her. The applicant testified that her father wanted a place to sleep a couple of times a week when off the road. I accept this evidence in light of the other, corroborative evidence before me. The insured’s former employer testified that the insured was known to camp out at his daughter’s place on occasion and the evidence was that the insured did not have a stable residence, sometimes also sharing a basement apartment with a couple in Whitby and staying with friends in Brampton.

The evidence was also that initially the insured was to pay the difference in rent between the one and two-bedroom apartments, but when he learned that the applicant’s work hours had been cut to part-time, he offered to help her further. The applicant’s evidence was that they were to have split the rent. There appears to be no money leaving the applicant’s account that coincides with rent payments. In fact, a thorough examination of the applicant’s financial records appears to show that her father paid most of the rent almost all of the time and I find that he did so.

The applicant also testified, and I accept, that her father paid to have a tattoo removed from her hand given her desire to maintain a more professional appearance. She also testified that she has not yet had the removal job completed because it is an expensive procedure.

CONCLUSION

The particular circumstances of this case demonstrate that the applicant was principally dependent on her father for financial support. The applicant could only pay one-third of her expenses on her own. The insured was responsible for most of her expenses which he paid with his own money or intended to pay by promising to reimburse her OSAP loan. As such, he substantially contributed to all of her expenses and his contribution allowed her to focus on her studies and otherwise prepare herself for her future career. His financial participation in her studies and career mirrors that of many other parents, many of whom have much greater means and need not resort to selling assets or taking loans.

Given that the applicant was principally dependent on the insured for financial support, she is entitled to benefits as prescribed in section 25 of the Schedule.

EXPENSES:

The parties did not address the issue of expenses before me. I strongly urge the parties to come to a mutually satisfying agreement with respect to the matter of expenses. Should they be unable to agree, they may request an expense hearing before me within 30 days from the date of this decision, in accordance with Rule 79 of the Dispute Resolution Practice Code.

June 7, 2010

Rosemary Muzzi Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 77

FSCO A09-000008

BETWEEN:

TRISTA POUTNEY

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. The applicant was a dependant of the insured and is therefore entitled to a death benefit pursuant to section 25 of the Schedule.

June 7, 2010

Rosemary Muzzi Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Section 2(6)
3. 3(1984), 1984 CanLII 2019 (ON HCJ), 48 O.R. (2d) 451 (Ont. H.C.J.), upheld on appeal (1985), 1985 CanLII 2022 (ON CA), 50 O.R. (2d) 797 (Ont. C.A.)
4. 4See Behre v. State Farm Mutual Automobile Insurance Co. [2002] OFSCID No. 134, September 9, 2002; and, Mark and Dominion of Canada General Insurance company (FSCO A96-000341, January 27 1999)
5. 5Co-operators General Insurance Co. v. Halifax Insurance Co. (Samis, December 14, 2001), aff’d Co-operators General Insurance Co. v. Halifax Insurance Co., 2002 CarswellOnt 2092 (S.C.J.), at page 8 ; Federation Insurance v. Liberty Mutual (Samis, May 7, 1999), aff’d Liberty Mutual v. Federation Insurance Company (Ont.Div.Ct., September 15, 1999) and [2000] O.J. No. 1234 (C.A.)
6. 6Exhibit 3
7. 7In my view, the discrepancy of the remaining $7,000 is never completely explained by the evidence, even taking into account the OSAP loan and the applicant’s other financial circumstances.
8. 82009 CanLII 64827 (ON S.C.) Endorsement November 19, 2009 by Gordon J.
9. 9The appraiser hired by the applicant testified that it could have been worth somewhere between $15,000 and $20,000 in 2006 before it had deteriorated and given the market at that time. The applicant’s appraiser assessed the car as a custom car valued for its originality but also appeared to have valued it on the sum of its parts in a racing (“pro-street”) context. The insurer’s appraiser did not attribute much value to the car, less than one third the advertised selling price, noting that it had deteriorated, retained very few original features and was outfitted more for racing than for driving and would therefore have a limited market.