Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 9

Appeal P09-00004

ALAN BROOKES Appellant

and

AVIVA CANADA INC. Respondent

Before: David Evans

Representatives: David J. Gillespie for Mr. Brookes Susan Bromley for Aviva Canada Inc.

Hearing Date: September 1, 2010

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal of the arbitration order, dated January 9, 2009, is hereby dismissed.
If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated - August 2011), an expense hearing shall be requested, as set out below, within sixty days of the date of this decision.

February 9, 2012

David Evans Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal arises out of a dispute over the proper calculation of a weekly benefit known as the loss of earning capacity benefit (LECB). LECBs were a feature of the SABS-1994¹ replacing income replacement benefits if claimants remained unable to return to their pre-accident jobs. It depended on the difference between what claimants could reasonably earn before the accident – their pre-accident earning capacity (PEC) - and what they could reasonably earn after it – their residual earning capacity (REC). The claimant Alan Brookes appeals Arbitrator Ashby's calculation of both his pre-accident and residual earning capacity in her decision dated January 9, 2009, as well as her denial of a special award.

II. BACKGROUND

On July 1, 1994, Mr. Brookes was severely injured in an automobile accident. Although unemployed at the time of the accident, he had been employed at some point during the 156 weeks before it.² He had worked as an insulator and was entitled to income replacement benefits (IRBs). Since he could not resume working as an insulator, he eventually qualified for loss of earning capacity benefits. While LECBs are normally offered two years after an accident, IRBs continued being paid until 1999, when Mr. Brookes' insurer, Aviva Canada Inc., offered him a weekly LECB of $70.52. He was deemed to reject this offer and so was referred to a residual earning capacity designated assessment centre (REC DAC) assessment. Based on this first REC DAC, Aviva started paying weekly LECBs of $244.40 in September 1999.

Section 33 of the SABS-1994 requires two further REC DACs after three and eight years. The second REC DAC occurred in May 2004 as part of the three-year mandatory review. The eight-year review was ongoing and accordingly the third REC DAC was not in dispute at the time of the hearing.³

Throughout, Mr. Brookes first sought further training and then work. He upgraded his education to Grade 12 but was unable to complete two community college business programs. In 2001, he found selling boats involved too much standing and too little pay.

After joining the Teamsters Union as a warehouseman, Mr. Brookes worked at Ontario Power Generation's (OPG) Darlington plant, which suited him as it was sedentary. Later he worked at OPG's Pickering plant in a more physical job. Finally, he worked for Hydro One in Sudbury in 2006, but this involved a long drive from home and a motel stay. He was laid off from all these warehouseman jobs for economic reasons.

As for the calculation of the LECB itself, which depended upon the Arbitrator's findings regarding the PEC and the REC, the Arbitrator preferred the evidence of Mr. Bruce Webster of PriceWaterhouseCoopers (PWC), who had been retained by Aviva to determine the PEC, as well as the two REC DAC reports referred to above, over the evidence led by Mr. Brookes. Mr. Brookes relied mostly upon the calculations of Joel Kumove, Rehabilitation Counsellor, a founder of MDAC and a participant in REC DACs.

Finally, with respect to the special award, the Arbitrator noted that Aviva's correspondence with Mr. Brookes in November 1996⁴ and February 1999 indicated that it erred in its assessment of Mr. Brookes' LECB, but concluded that "while Aviva erred there is no evidence that it acted in an imprudent, inflexible or immoderate manner in adjusting the file."

As seen below, Mr. Brookes undertook a detailed analysis of virtually every one of the Arbitrator's findings.

III. ANALYSIS

The complete submissions of Mr. Brookes comprised over 100 single-spaced pages. Essentially, he seeks to have me revisit almost every finding the Arbitrator made. However, my role as a Director's Delegate is not to conduct a rehearing or to reweigh the evidence because s. 283(1) of the Insurance Act limits appeals to "a question of law."

Regarding that limit, in Kanareitsev v. TTC Insurance Company Limited, 2008 CanLII 26262, the Divisional Court reiterated that appeals adjudicators must not try arbitration cases de novo or simply substitute their views for those of the arbitrator. The court went on to note at para. 32 that while the arbitrator in that case "may not have engaged in a detailed analysis of each and every aspect of the major points in issue, her reasons refer to the principal evidence she relied upon and provide a justification for her conclusions." Thus, Mr. Brookes' submission that the Arbitrator's decision should have set out a detailed analysis of every piece of evidence is incorrect.

Furthermore, Mr. Brookes' submissions mostly state that the Arbitrator erred in law by failing to accept or properly weigh his evidence. However, it suffices that, as found below, the Arbitrator referred to the principal evidence she relied upon and justified her conclusions.

To start with pre-accident earning capacity, s. 29 of the SABS provides that an insured's PEC depends upon employment status. The Arbitrator was required by s. 29(3) to calculate the PEC "using the gross annual income from employment that the person could reasonably have earned at the time of the accident, having regard to the person's personal and vocational characteristics at that time." [Emphasis added.]

Mr. Kumove (the rehabilitation counselor referred to above) relied on several factors he considered as Mr. Brookes' personal and vocational characteristics at that time to determine what Mr. Brookes could have reasonably earned. First, he relied on a business manager's letter alleging that Mr. Brookes would have been called back to work shortly after the accident. He also claimed that Mr. Brookes would have been more continuously employed after the accident than before based both on the improved economy and on the employment history of Mr. Brookes' brother Paul, who was also an insulator. Mr. Kumove therefore performed a "straight line" calculation to arrive at a PEC of about $64,000 a year.

By way of contrast, while Bruce Webster of PWC also calculated a PEC by considering the business manager's letter, he did not perform a straight line calculation. Rather, he averaged Mr. Brookes' periods of employment and unemployment to arrive at it. He then calculated a higher, second PEC using the best 52 weeks of income during the 156 weeks before the accident. (This was the PEC ultimately accepted by the Arbitrator, as noted below.)

In determining whether to apply the straight line or the averaging approach, the Arbitrator noted that both parties relied on the Lehman and GAN Canada Insurance Co. arbitration and appeal decisions, (OIC A96-001417, October 27, 1997) and (FSCO P97-00064, August 10, 1998). Based on that case, she accepted that the business manager's letter was relevant to show what income Mr. Brookes could have anticipated. However, she found the evidence on the economy speculative. She also found the comparison of the two brothers unreliable because of their different pre-accident employment histories and lack of tax records for Paul Brookes. Lastly, she did not accept Mr. Kumove's straight line calculation because it did not consider Mr. Brookes' sporadic work history. Instead, she preferred "the approach taken in Lehman that an average of the pre-accident employment and unemployment should be applied" and accepted Mr. Webster's calculation.

Mr. Brookes submits that the Arbitrator erred in how she applied the principles from Lehman. I find that hard to see, given the similarity between the cases. As was the case with Mr. Brookes, Mr. Lehman had been laid off for some time before the accident. He received a recall letter from his employer four months after the accident. The insurer in Lehman proposed that Mr. Lehman's PEC should be based strictly on his employment history because the recall letter was irrelevant; Mr. Lehman proposed that only the recall letter was relevant and that his PEC should be based on what it said he would have earned. The arbitrator accepted neither proposition, considering that while the letter was relevant, she had to take into account Mr. Lehman's sporadic work history. Instead, she averaged Mr. Lehman's periods of employment and unemployment over the four years preceding the accident and multiplied the resulting percentage against the income in the recall letter to obtain a PEC. However, since that was less than the figure obtained using the best pre-accident period of employment, the latter figure determined the PEC. This finding was upheld on appeal.

Mr. Webster applied the same algorithm as in Lehman. As Arbitrator Ashby put it, "For the purposes of this calculation he averaged Mr. Brookes' periods of employment and unemployment. He determined Mr. Brookes was employed 47% of the time for the period from July 6, 1991 to July 1, 1994." This calculation of 24.5 weeks of employment plus 27.5 weeks of Employment Insurance Benefits led to a total income calculated by the Arbitrator of $53,815.50. Since this was less than the income based on the best 52 weeks of employment, namely $55,067.00, the PEC was based on that higher, second figure.

Given the similarities between the situations of Mr. Lehman and Mr. Brookes, I see no error of law in the Arbitrator's conclusion.

As for the other factors mentioned by Mr. Brookes, he submits that in considering the evidence about the economy the Arbitrator 1) "erred in law, in that she failed to assign proper weight to Mr. Kumove's Vocational Opinion," 2) "erred in law in failing to accept the evidence of Mr. Kumove," and 3) "erred in law in failing to consider that over time, and through multiple rotations of the unemployed members list, the amount of time spent employed and unemployed would equalize between workers just as Mr. Kumove stated in his testimony." However, these submissions ask me to substitute my own views for those of the Arbitrator. Furthermore, the position that employment and unemployment would average out goes against the admonition in the appeal decision in Lehman that a person's earning capacity "cannot be capacity in the broadest sense. That would be inconsistent with the treatment of those who were employed at the time of their accident." Essentially, Mr. Brookes wishes to ignore the periods of unemployment in assessing his PEC. That would also be inconsistent with Lehman.

Regarding the brothers' comparative employment history, Mr. Brookes submits that the Arbitrator "erred in law in failing to consider any period prior to the 156 weeks" before the accident. However, as was stated in DesRoches and Economical Mutual Insurance Company, (FSCO P99-00062, June 7, 2002), how far back the trier of fact should look depends on the circumstances. Again, that was a matter for the Arbitrator to determine; there is no error of law simply because Mr. Brookes disagrees with her determination.

On the same subject, Mr. Brookes submits that the Arbitrator erred in law in that she failed to consider:

the statements from Mr. Brookes' brother Paul about the state of the economy recently;
"the availability of Travel Cards during periods of economic slowdown";
"that employment in Ontario is good at this time within the Union";
"Mr. Paul Brookes' testimony with respect to his salary in Alberta"; and,
testimony that Mr. Brookes probably would have gone to Alberta before his brother Paul.

None of these submissions address an error of law. The Arbitrator made findings of fact about Mr. Brookes' pre-accident earning capacity based on evidence – the brothers' different pre-accident employment histories and lack of tax records for Paul Brookes – and since Mr. Brookes' submissions merely go to the weight to be given to that evidence, there are no grounds to intervene.

Turning to Mr. Brookes' residual earning capacity and the first REC DAC of 1999, the Arbitrator noted that it established Mr. Brookes was capable of working as a Mechanical Assembler at an annual salary of $28,952.00. The Arbitrator found Mr. Brookes provided no medical evidence which was reasonably contemporaneous with the REC DAC and that the conclusions in Aviva's own multi-disciplinary assessments conducted in December 1998 and January 1999 were not significantly different. Accordingly, she found that the determination of Mr. Brookes' residual earning capacity by the REC DAC was reasonable.

In response, Mr. Brookes argues at length that the Arbitrator ignored medical reports that she should have considered to be contemporaneous and that the REC DAC was fatally flawed in its assessment by, for instance, failing to consider the possibility of deterioration or to provide reasonable vocational alternatives considering his pre-accident vocational characteristics and post-accident limitations. He also refers to some reports that were completed several years after the DAC as impacting on the assessment of it.

Regarding the Arbitrator's alleged failure to review all of the medical reports in her decision, since at least Sacco and Zurich Insurance Company, (FSCO P96-00063, September 25, 1998) the law at the Commission has been that

[w]hile an arbitrator must give reasons for his or her decision, he or she need not detail or summarise all the evidence. That would not be sensible or in keeping with the adjudicator's mandate to deal with disputes expeditiously. There is no reason to conclude that the arbitrator ignored evidence before her simply because she did not specifically mention it.

Similarly, the Divisional Court stated in State Farm Mutual Automobile Insurance Co. v. Movahedi, [2001] O.J. No. 5099 that "Not reciting all the evidence does not mean the arbitrator failed to consider it," and its decision in Kanareitsev only reaffirms that position. Accordingly, it was not necessary for the Arbitrator to recite all the reports in her decision.

As for Mr. Brookes' other points, it was up to the Arbitrator to determine how contemporaneous the reports had to be in relation to the REC DAC in order to be considered. It was also up to her to reach her own conclusions regarding the DAC. Finally, as will be seen in a moment regarding the second REC DAC, the Arbitrator also dealt with the issue of deterioration.

Therefore, I see nothing in the Arbitrator's decision dealing with the first REC DAC to suggest that she committed any error of law in weighing it.

The second REC DAC report was issued on May 24, 2004. The assessors established Mr. Brookes' REC as $48,321.00 per annum based on his work as a warehouseman. Mr. Kumove testified that the DAC was fatally flawed because it did not follow the Commission's revised DAC guideline and did not consider the probability of deterioration if Mr. Brookes continued working as a warehouseman.

The Arbitrator devoted several pages to analyzing this REC DAC. The Arbitrator noted that the REC DAC assessors decided not to conduct a situational assessment and shortened the Functional Abilities Evaluation on the basis that Mr. Brookes had been recently employed as a warehouseman at Darlington for 14 months. While she agreed that the Commission's DAC guideline was not followed, she found she had authority to determine the issue pursuant to s. 279(1) of the Insurance Act,⁵ relying on Monette and Commercial Union Assurance Company, (OIC A09-000318, June 29, 1998). She agreed with the DAC's conclusions because Mr. Brookes had been able to work as a warehouseman without accommodation for his accident-related impairments. She also found that his physical assessment and his performance on the tests conducted were consistent with his testimony regarding his capabilities.

Mr. Brookes submits that the Arbitrator erred in law in misapplying Monette and in failing to consider that the question was different in Monette. However, the general power to determine issues before the Arbitrator given by s. 279(1) does not depend on the individual facts of the case. Indeed, most of Mr. Brookes' submission on this point is another request for me to reweigh the evidence and arrive at a different conclusion from that of the Arbitrator. Thus, to cite one example, at para. 100 of his submissions Mr. Brookes submits that the Arbitrator

erred in law in that she failed to consider that she failed to consider that the May 2004 REC DAC failed to consider the possibility that Mr. Brookes would not return to Darlington, but rather would have to work in other environments such as the OPG Pickering and in Sudbury, for the Bruce Nuclear Plant.

In any event, the Arbitrator did consider that point:

Mr. Brookes' work in Sudbury, which he described as similar to the work at Darlington, was also within his abilities. It was the long drive which caused him to decline similar work at the Bruce Nuclear Generation Plant.

The Arbitrator was also not persuaded that Mr. Brookes' post-accident employment would cause him physical deterioration. On that point, she was not prepared to rely on Mr. Kumove, as he was not a medical practitioner and gave his opinion four years after the completion of the REC DAC. She concluded that Mr. Brookes' previous employment with Darlington was the most accurate indicator of his employment capacity.

Mr. Brookes submits that the Arbitrator took too narrow a view of the role of Mr. Kumove, noting that in Sivananthan and State Farm Mutual Automobile Insurance Company, (FSCO P04-00009, November 18, 2004) I held that vocational assessors may use medical opinions of others to reach their conclusions about vocational ability. He then goes on to set out large portions of Mr. Kumove's evidence, as well as yet more assessments that the Arbitrator should have considered. However, it is one thing to say that an Arbitrator had the right to consider a vocational assessor's report, as happened in Sivananthan, and another thing to turn the issue on its head and say an Arbitrator errs in law if she is not prepared to rely on a vocational assessor's report. While the Arbitrator could have spelled out her findings in more detail, this is still more a matter of weighing the evidence and not a matter of law. More to the point, the Arbitrator had evidence before her about Mr. Brookes' ability to work, including not only the assessments provided by Aviva, but also the evidence she heard from Mr. Brookes himself as well as his post-accident work history. She made a finding about the possibility of deterioration based on that evidence.

As with the first REC DAC, I see nothing in the Arbitrator's decision dealing with the second REC DAC to suggest that she committed any errors of law in assessing it.

Finally, Mr. Brookes submits that the Arbitrator erred in law in not granting him a special award under s. 282(10) of the Act. However, that subsection only mandates a special award if "the arbitrator finds that an insurer has unreasonably withheld or delayed payments." In this case, the Arbitrator concluded that "while Aviva erred there is no evidence that it acted in an imprudent, inflexible or immoderate manner in adjusting the file." Mr. Brookes submits that

[i]n holding that there was no evidence that Aviva Canada Inc. acted in an imprudent, inflexible and immoderate manner in adjusting the file, the Learned Madam Arbitrator Denise Ashby failed to consider the proper test of whether Aviva Canada Inc. is liable to pay the Appellant a special award: did Aviva Canada Inc. unreasonably withhold or delay payment of LEC benefits which they were obligated to pay the Appellant pursuant to the [SABS]?

He submits that the Arbitrator failed to consider the decision of Liberty Mutual Insurance Company and Persofsky et al., (FSCO P00-00041, January 31, 2003). However, that case dealt with the calculation of a special award, since as noted in para. 3 of that decision "Liberty Mutual does not challenge the imposition of a special award." Unless the Arbitrator found that the insurer had acted unreasonably, she would have had no reason to refer to Persofsky.

As was stated in Succar and Wawanesa Mutual Insurance Co. and Zurich Insurance Company (OIC A-012273 and A-014717, March 20, 1996), the making of a special award is mandatory only if the Arbitrator finds that an insurer "has unreasonably withheld or delayed payments." And in asking herself whether the Insurer acted in "an imprudent, inflexible or immoderate manner in adjusting the file," the Arbitrator was simply applying a pithier version of the accepted test of unreasonable behaviour defined by Arbitrator Palmer in Plowright and Wellington Insurance Company, (OIC A-003985, October 29, 1993), as "behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate." This means that the Arbitrator was indeed considering the proper test of whether the insurer unreasonably withheld or delayed payments.

Mr. Brookes cites as evidence of the insurer's unreasonableness, among other things, submissions made at the hearing by Aviva and various letters to Mr. Brookes from Aviva. However, it was up to the Arbitrator to determine whether or not that test had been met. Each of the elements Mr. Brookes identifies in his submissions as supposedly indicating unreasonable behavior would be subject to the weight to be given it by the Arbitrator. I have no reason to doubt that the Arbitrator reviewed the evidence, and she was not so persuaded of its weight. Accordingly, I have no basis on which to substitute my own special award.

In conclusion, the Arbitrator's reasons refer to the principal evidence she relied upon and provide a justification for her conclusions. For the reasons set out above, I have no reason to intervene in any of her findings. Consequently, the appeal is dismissed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79.2 of the Dispute Resolution Practice Code, Fourth Edition (Updated August 2011), an expense hearing shall be requested within sixty days of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to or the quantum of these expenses, or both, as are in dispute.