Financial Services Commission of Ontario

Neutral Citation: 2013 ONFSCDRS 20 FSCO A11-000981, A11-000982, A11-001153 and A11-001154

BETWEEN:

NELSON GNANAM, CHRISTINE NELSON, JESUNESAN GNANAPRAGASAM and CAROLINE SEEVARATHINAM-ANJANTHAN

Applicants

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Jeffrey Rogers

Heard: September 24, 25, 26 and 27, 2012, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were completed on November 13, 2012

Appearances: Mr. Roberto Romero, licensed paralegal, for Mr. Nelson Gnanam and Mrs. Christine Nelson Ms. Georgiana Sirbu, lawyer, for Mr. Gnanapragasam and Ms. Seevarathinam-Ajanthan Mr. Nicholaus de Koning, solicitor, for Economical Mutual Insurance Company

Issues:

The Applicants claim that they were injured in a motor vehicle accident on August 27, 2009. Each applied for statutory accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ Economical denied their claims on the grounds that they were not injured in an “accident” as defined in section 2(1) of the Schedule, or they wilfully misrepresented material facts with regard to their applications for benefits. The parties were unable to resolve their disputes through mediation, and each of the Applicants filed an application 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 preliminary issues hearing are:

1. Were the applicants injured as a result of an “accident” as defined in section 2(1) of the Schedule?

2. Did the applicants wilfully misrepresent material facts with respect to their application for benefits?

3. Is any party entitled to its expenses of this preliminary issues hearing?

Result:

1. The applicants were involved in an “incident” within the meaning of section 2(1) of the Schedule.

2. The issue of whether the applicants suffered impairments and are entitled to benefits as a result is reserved to the main arbitration hearing.

3. The applicants did not materially misrepresent material facts with respect to their application for benefits.

4. The decision on expenses is reserved to the hearing Arbitrator. If the parties resolve the remaining issues without a hearing, but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter no later than 30 days after all other issues have been resolved.

EVIDENCE AND ANALYSIS:

Introduction

Section 2(1) of the Schedule defines “accident” to mean “an incident in which the use or operation of an automobile directly causes an impairment…” The definition has two components:

1. There must be an “incident” involving the use or operation of an automobile; and

2. The use or operation of an automobile must directly cause an “impairment”;

This decision only addresses the first question raised by the definition, which is whether the applicants were involved in an “incident”. I have not decided whether they suffered an impairment.

At the hearing, Economical indicated that its position was that the applicants met neither component of the definition. First, there was no “incident” as the applicants claimed. Second, if there was an “incident”, it did not cause the applicants to suffer any impairments.

The parties were prepared to address both of these areas of dispute. I ruled that this preliminary issue hearing should be limited to the question of whether the “incident” occurred because that was the most expeditious and cost effective way to proceed. I reasoned that a finding that the “incident” did not occur would resolve the entire dispute and render moot the issue of impairments. On the other hand, any decision I made on impairment would be limited to the threshold issue. A further hearing would still be required to determine whether the impairments qualified the applicants for the benefits they claimed. The evidence I had heard on this issue would likely be duplicated at the further hearing. I limited the scope of this hearing to avoid the cost of presenting the same evidence twice.

Section 48(1) of the Schedule allows an insurer to terminate payment of a benefit if “an insured person has wilfully misrepresented material facts with respect to an application for a benefit…” Economical indicated that it also took the position that, if there was a collision as the applicants reported, it was staged. They thus wilfully misrepresented material facts. I concurred with the view of the pre-hearing Arbitrator that this was a legitimate issue for arbitration at the preliminary issue hearing.

Overview

There was no evidence to support Economical’s claim that a collision did not occur as reported. All of the evidence showed that the applicants’ car collided with a van, at the intersection where the police found them. Economical’s expert witness testified that there was no question that a collision occurred, and Economical conceded the point in its submissions.

Economical’s alternate position was that the applicants wilfully misrepresented material facts with regard to the collision because they staged it. That theory is based on the view that the physical evidence shows that the collision would not have occurred, unless it was staged. For the reasons that follow, I reject that theory. I find that the applicants did not stage the collision. Any discrepancies between the applicants’ version of events and the way the collision occurred do not result from wilful misrepresentation by the applicants.

Facts

On August 27, 2009, at about 1:26 a.m., the police were called to the scene of a reported collision between two automobiles, at the intersection of Legacy Drive and 14th Avenue, in the Town of Markham. The intersection is a “T” intersection, with 14th Avenue as the cross. Officer Joshua LaCroix attended. He found a 1998 Honda Civic and a 2002 Dodge Caravan on the curb at the Northwest quadrant of the intersection. The applicant Nelson Gnanam (Mr. Gnanam) is the driver of the Honda Civic. The other 3 applicants are passengers of the Honda. They are Mr. Gnanam’s wife, his niece (Ms. Seevarathinam-Ajanthan), and her husband.

Upon arriving at the scene, Officer LaCroix interviewed the drivers and occupants of both vehicles. No one claimed to be injured. The officer was satisfied that this was a straightforward motor vehicle accident. He noticed nothing unusual about the damage to the vehicles or their resting position. It struck him that the occupants of the Honda, except for Mr. Gnanam, were unusually relaxed for people who had just been in an accident. Mr. Gnanam was visibly upset. This did not concern Officer LaCroix enough for him to document his observation or take further action. Although Mr. Gnanam was clearly at fault in the collision, Officer LaCroix exercised his discretion not to lay a charge. He accepted as credible Mr. Gnanam’s explanation that he did not see the other vehicle, because it had come over a slight hill. He called a tow truck to remove the vehicles and later prepared his report in due course.²

Officer LaCroix testified that Mr. Gnanam later attended at the police station with his former legal representative and asked him to change his report to show that he and the other applicants were in fact injured.³ When this occurred, Officer LaCroix recalled the unusually calm behaviour of the passengers of the Honda, and his nascent suspicion crystallized. He informed Economical of his concerns and Economical retained Kodsi Engineering to investigate the collision. Economical’s denial of the applicants’ claims for accident is based on the opinion it obtained from Kodsi Engineering. In his testimony, Officer LaCroix confirmed the basis of his suspicions. But the only evidence in support of Economical’s theory that the accident was staged was that of Mr. Kodsi.

Analysis

As I noted above, the intersection of Legacy Drive and 14th Avenue is a “T” intersection. There is a stop sign controlling traffic on Legacy. The collision occurred when Mr. Gnanam’s Honda proceeded through the intersection, after stopping at the sign. He was about to make a right turn from Legacy Drive onto 14th Avenue. Ms. Jeunelle Humphrey had been driving her Caravan in the right lane on 14th Avenue, coming from Mr. Gnanam’s left. In his report, Officer LaCroix drew a diagram showing the right front corner of Ms. Humphrey’s Caravan hitting around the driver’s door of the Honda at a 20 to 35 degree angle.

Mr. Kodsi concluded that the damage to the vehicles was consistent with an impact angle of 70 to 80 degrees, and not 20 to 35 degrees as shown in the Accident Report. He also concluded that the applicants’ vehicle was likely stopped or travelling very slowly at the time of impact. This was consistent with the reported speed of 5 kmh. Mr. Kodsi’s opinion was that the applicants would have been doing between 10 and 15 kmh. if they had stopped at the stop sign and then proceeded at a normal pace. Mr. Kodsi also concluded that the damage to the vehicles, and their rest positions, was consistent with the Caravan hitting the Honda at less than the reported speed of 50 kmh. In his report⁴, Mr. Kodsi also noted that both vehicles showed damage that was not related to this collision. This note only served to obscure the analysis. He admitted that the unrelated damage was not relevant to his conclusions. There was no question that the two vehicles collided.

The report Mr. Kodsi prepared for Economical states that the purpose of the investigation was “to comment on the consistency of the damage sustained by the vehicles with respect to the reported sequence of events.” The conclusion was that “the damage sustained by the vehicles was inconsistent with the reported sequence of events…” Economical accepted this as meaning that the collision must have been staged.

There was little difference of opinion between Mr. Kodsi and Mr. Jennings, the engineer that the applicants hired to respond to Mr. Kodsi’s findings.⁵ Mr. Jennings agreed that, at impact, the Honda was stopped or doing less than 5 kmh. He agreed that the Honda would be going faster under normal acceleration from the stop sign to the impact location. He also agreed the Caravan was doing less than 50 kmh. Both he and Mr. Kodsi calculated its speed at 30 to 35 kmh. He agreed that the angle of impact was not as shown in the Accident Report, but he disagreed with Mr. Kodsi’s calculation of 70 to 80 degrees. He calculated the angle at 50 to 60 degrees. Neither Mr. Kodsi nor Mr. Jennings could account for the rest positions of two vehicles.

The angle of impact is significant because of the geometry of the intersection. The intersection is designed with a curved curb. A driver turning right, if driving properly, will tend to enter 14th Avenue at an angle. Mr. Kodsi calculated the impact angle at 20 to 35 degrees, if driving properly. Mr. Jennings concluded that an impact angle of 40 to 50 degrees could be achieved, with a slightly wide or late turn. However, Mr. Kodsi agreed that the geometry of the intersection allowed for the impact angle of 90 degrees, if driving improperly.

I find it unnecessary to resolve the difference of opinion between Mr. Kodsi and Mr. Jennings about the impact angle of the collision. Their opinions support the conclusion that Mr. Gnanam was not driving properly, when the collision occurred. He was not making a proper turn and he was going slower than expected. But that does not prove that the collision was staged. The evidence, viewed as a whole, supports the conclusion that the applicants did not stage the collision.

Economical’s theory must be analysed in light of the evidence of Ms. Humphrey and Ms. Renee Amsterdam. Ms. Amsterdam was a passenger of the Caravan and, as noted above, Ms. Humphrey was the driver. Economical called them as witnesses. Their evidence illustrates that there was no conspiracy between the drivers of the two vehicles. Their evidence also showed that the source of the information that the Caravan was doing 50 kmh. on impact was Ms. Humphrey. Ms. Humphrey also provided an explanation for the rest positions of the vehicles.

Both Ms. Humphrey and Ms. Amsterdam testified that they did not know the applicants before the collision. There was no evidence to the contrary and no reason to doubt their veracity. Neither was injured in the accident. There was no evidence that they made any claims for compensation as a result of the accident, except for repair of the damage. Neither had a clear recall of how the accident occurred.

I reject Economical’s submission that Ms. Humphrey and Ms. Amsterdam would have had better recall, had there been a “genuine accident”. Rather, I view their lack of memory as an indication that, for them, this was an insignificant event. Therefore they put it out of their minds and moved on.

I reject Economical’s attack on Ms. Humphrey and Ms. Amsterdam’s credibility, in its written submissions. Economical chose to call them as its witnesses. It was not open to Economical to submit that they were not called for the truth of their testimony. If Economical believed their testimony to be untruthful, its options were to seek a finding that these witnesses were adverse, and leave to introduce prior inconsistent statements, or provide contradicting evidence.⁶ It did neither.

The fact that the occupants of the two vehicles were unknown to each other, the occupants of the Caravan claimed no compensation, and the occupants of the Caravan have all but forgotten the incident, lead me to conclude that there was no conspiracy between the applicants and occupants of the Caravan.

With no conspiracy, Economical’s theory must be viewed as a claim that Mr. Gnanam staged the accident on his own. Thus he risked serious injury, or worse, by driving his car into the path of an oncoming, unknown vehicle, appearing from over a hill, at unknown speed, and allowing it to plow into his vehicle, close to where he sat, for the chance of economic gain. He also put his wife and family members in the same position. He, and all of his co-conspirators, then neglected to mention to the police officer, the most important aspect of their plan: the fact that they were injured. That sequence of events appears most unlikely.

Despite her general lack of recall, Ms. Humphrey’s evidence did clarify two further questions. First, it appears that she was the source of the information that the Caravan was doing 50 kmh. at the time of impact. The applicants would not have known her speed and Ms. Humphrey testified that she expects that she was doing the speed limit at the time of the accident. The speed limit on 14th Avenue is 50 kmh. I accept that Ms. Humphrey honestly believed that she was doing the speed limit. Thus, there was no misrepresentation in this regard. But, even if there was, the misrepresentation could not be attributed to the applicants.

The second question that Ms. Humphrey clarified is how the two vehicles ended up where they did. Both vehicles ended up on the curb, at the northwest quadrant of the intersection. That is the quadrant to the right of the Honda that the Caravan hit from the left. Both Mr. Kodsi and Mr. Jennings testified that the force of the impact could not have taken the vehicles there. But they did not include post-impact steering in their modelling.

Ms. Humphrey testified that she ended up on the curb because, realizing that the impact had forced her to her left, she steered to the right and that took her onto the curb. Steering to the right was the natural reaction. Had she kept going left, she would be exposed to impact from oncoming traffic. I find it likely that Mr. Gnanam steered to the right as well, either realizing that he was about to be hit from the left, or having been hit from the left. Turning to the right would have tended to take the Honda onto the curb as well. Recall that Officer LaCroix noted nothing unusual about the resting positions of the vehicles. That reinforces my finding that they ended up on the curb as a result of the reflexive reaction of the drivers, and not because the collision was staged.

One aspect of the facts remains to be addressed. Mr. Gnanam secured comprehensive insurance coverage on his 1998 Honda shortly before the accident. Economical spent a great deal of time on this issue in cross-examination. Mr. Gnanam explained that he had always intended to have comprehensive coverage, but his broker made a mistake that was only corrected shortly before the accident. Economical noted the change in coverage in its submissions, but made no suggestion on how the change enhanced the applicants’ claims for accident benefits, or supported its theory of staging.

The change does not enhance the applicants’ entitlement to accident benefits. The only advantage of comprehensive coverage in these circumstances is that Intact would pay the cost of repairs to Mr. Gnanam’s vehicle, less any deductible, in an at fault accident. Mr. Gnanam gets no economic gain. I accept Mr. Gnanam’s explanation for the change in coverage. The idea that he changed coverage, knowing that he would be involved in an at fault accident, in which his principal aim was to recover accident benefits to which he would be entitled without comprehensive coverage is far-fetched. Assuming that was Economical’s theory, I reject it.

In summary, I find that the applicants were involved in an “incident”, within the meaning of section 2(1) of the Schedule. I further find that the applicants did not wilfully misrepresent material facts with respect to their application for benefits. As noted earlier, the issue of impairments is left to be determined at the main hearing.

PROCEDURAL RULING:

Onus of Proof

The Applicants raised the question of onus of proof at the beginning of the hearing, and revisited it several times during the course of the hearing. Their position was that the insurer bore the onus of proof. I ruled that the applicants bore the onus of proving that they were involved in an “accident”, as established by the Director’s decision in Wootton and TTC Insurance Company Limited.⁷ I ruled that this principle cannot be attacked by characterizing the insurer’s position as an allegation of fraud, as the applicants did. Economical conceded that, if the applicants proved that they were involved in an “incident”, Economical bore the onus of proving that it was staged. Economical then retreated from this concession, in its written submissions.

In the end, the issue of onus played no part in the resolution of this dispute. This was not a close case that turned on who bore the onus of proof. There was no evidence to support Economical’s position that the collision did not occur, and little merit to its theory that the accident was staged. By definition, accidents occur when drivers do something they should not have done, and they rarely have total recall of what happened. I suspect that a forensic investigation can conclude in almost every case that “the damage sustained by the vehicles was inconsistent with the reported sequence of events…”, as Mr. Kodsi did in this case.

EXPENSES:

The decision on expenses is reserved to the hearing Arbitrator. If the parties resolve the remaining issues without a hearing, but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter no later than 30 days after all other issues have been resolved.

February 4, 2013

Jeffrey Rogers Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2013 ONFSCDRS 20 FSCO A11-000981, A11-000982, A11-001153 and A11-001154

BETWEEN:

NELSON GNANAM, CHRISTINE NELSON, JESUNESAN GNANAPRAGASAM and CAROLINE SEEVARATHINAM-ANJANTHAN

Applicants

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 applicants were involved in an “incident” within the meaning of section 2(1) of the Schedule.

2. The issue of whether the applicants suffered impairments and are entitled to benefits as a result is reserved to the main arbitration hearing.

3. The applicants did not materially misrepresent material facts with respect to their application for benefits.

4. The decision on expenses of this preliminary issues hearing is reserved to the hearing Arbitrator. If the parties resolve the remaining issues without a hearing, but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter no later than 30 days after all other issues have been resolved.

February 4, 2013

Jeffrey Rogers Arbitrator

Date

A party producing a witness shall not be allowed to impeach his or her credit by general evidence of bad character, but the party may contradict the witness by other evidence, or, if the witness in the opinion of the judge or other person presiding proves adverse, such party may, by leave of the judge or other person presiding, prove that the witness made at some other time a statement inconsistent with his or her present testimony, but before such last-mentioned proof is given the circumstances of the proposed statement sufficient to designate the particular occasion shall be mentioned to the witness and the witness shall be asked whether or not he or she did make such statement.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Exhibit 1, Motor Vehicle Accident Report
3. 3Mr. Gnanam’s evidence was that the only change he requested was to add the other occupants, who were not listed on the report, and Officer LaCroix told him that only injured passengers are listed. Nothing turns on this divergence.
4. 4Exhibit 7
5. 5See Mr. Jennings’ report in Exhibit 3
6. 6See s.23 of the Ontario Evidence Act, R.S.O. 1990. Chapter E. 23, which provides as follows:
7. 7(FSCO P04-00004, November 2, 2004), Appeal