Neutral Citation: 2014 ONFSCDRS 92

FSCO A11-001160

BETWEEN:

BETH ANN BURGESS

Applicant

and

PEMBRIDGE INSURANCE COMPANY

Insurer

Before: Robert Bujold

Heard: September 24, 25, 26, 27, December 17, 18, 2012 and April 16, 2013, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received by June 14, 2013.

Appearances: Andrew Elias for Ms. Burgess Aldo Picchetti for Pembridge Insurance Company

Issues:

The Applicant, Beth Ann Burgess, was injured in a motor vehicle accident on July 30, 2007. She applied for and received statutory accident benefits from Pembridge Insurance Company (“Pembridge”), payable under the Schedule.¹ Disputes arose regarding Ms. Burgess’ entitlement to certain accident benefits. The parties were unable to resolve their disputes through mediation, and Ms. Burgess 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:

Is Ms. Burgess entitled to a weekly income replacement benefit from August 6, 2007 to September 30, 2012?
What is the amount of any weekly income replacement benefit that Ms. Burgess is entitled to receive?
Is Ms. Burgess entitled to a medical benefit in the amount of $5,719.09 for transportation expenses to and from medical appointments?
Is Ms. Burgess entitled to payment in the amount of $2,513.72 for the cost of a diagnostic cervical facet evaluation recommended by Dr. Shapero in an OCF-22 dated April 22, 2008?
Is Pembridge liable to pay a special award because it unreasonably withheld or delayed payments to Ms. Burgess?
Is Pembridge liable to pay Ms. Burgess’ expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Ms. Burgess liable to pay Pembridge’s expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Ms. Burgess entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?

Result:

Ms. Burgess is entitled to a weekly income replacement benefit from August 6, 2007 to September 30, 2012.
Pembridge shall pay Ms. Burgess a weekly income replacement benefit from August 6, 2007 to September 30, 2012 in accordance with Schedule 2 of the report of Ian Wollach dated April 16, 2012.
Pembridge shall pay Ms. Burgess $5,692.29 for transportation expenses to and from medical appointments.
Pembridge shall pay Ms. Burgess $2,513.72 for the cost of a diagnostic cervical facet evaluation.
Pembridge shall pay Ms. Burgess a special award in the amount of $10,000.00 on account of weekly income replacement benefits unreasonably withheld for the period August 6, 2007 to December 11, 2008.
Pembridge shall pay Ms. Burgess interest at 2 per cent, compounded monthly, on all overdue benefits.
A decision on expenses is reserved.

EVIDENCE AND ANALYSIS:

The Accident and Sequelae

Ms. Burgess was 27 years old when she was involved in a high speed collision on July 30, 2007. A car pulled out from a side road into her path as she travelling at approximately 80 km/hr on a regional highway. She testified that she had no opportunity to brake or avoid a collision. Her vehicle was damaged beyond repair.

Ms. Burgess was driving a hatchback at the time of the accident. In the back of the vehicle, she was transporting what she described as a heavy A-frame metal sign approximately 3 feet tall by 2 feet wide. As a result the accident, the sign either hit her head or the back of her head rest.² She experienced immediate head and neck pain. She does not believe that she lost consciousness. She recalls exiting the vehicle, feeling disoriented and having her knees buckle beneath her. She fell to the ground. She called her parents and 911, and returned to her vehicle to sit and wait for an ambulance. Both police and ambulance attended the scene. Ms. Burgess was fixed with a cervical collar, strapped to a body board, and transported to hospital where she was diagnosed with a concussion. She had a large, painful haematoma on the back of her head.

Upon release from the hospital, Ms. Burgess’ parents were provided with an Outpatient Head Injury Routine form to note warning signs arising from concussions. On the form, “yes” has been noted beside “abnormal drowsiness,” “confusion as to name, time and place,” “severe headache,” and “abnormal twitching of limbs.”³ Subsequent CT scans of Ms. Burgess’ head and cervical spine were largely normal, although some minor changes in alignment of the cervical spine were noted.

Ms. Burgess testified (and the medical evidence supports) that, following the accident, she has suffered from extensive symptomology including: frequent headaches (some migranous, others tension like); continual neck and shoulder pain, described as a sharp burning sensation, aggravated by movements of the neck and upper back; intermittent numbness involving her left arm; and disturbed sleep. Her symptoms have also included complaints of difficulty maintaining focus and concentration; mental fatigue; some difficulty with word finding and mental math; nightmares; labile mood; and clumsiness.

At various times since the accident, treatment has included physiotherapy, chiropractic, acupuncture, massage therapy, laser therapy, and both diagnostic and therapeutic nerve block injections. Diagnostic nerve block injections⁴ were used by Dr. Shapero, a pain management specialist, to diagnose cervical facet joint pain that led to a cervical facet rhizotomy at Sunnybrook Health Sciences Centre (“Sunnybrook”) in September 2008 (approximately 14 months post-accident) to treat her ongoing pain symptoms. This invasive procedure involves the repeated insertion of a heated wire into her cervical spine to destroy pain carrying nerves. A second rhizotomy was performed in March 2010 (approximately 32 months post-accident). A third rhizotomy was being contemplated at the time Ms. Burgess gave evidence at the hearing.

At various times, Ms. Burgess has also taken several medications to address her symptoms including codeine; topamax; maxalt; amitriptyline; nortriptyline; and xylocaine/marcaine injections.

Entitlement to Income Replacement Benefits

Background and the Parties’ Positions

At the time of the accident, Ms. Burgess had recently opened a speciality foods shop and catering business, Docktails, in Bala, Ontario.⁵ Although her parents provided financial support and held shares in Docktails, Ms. Burgess was responsible for the management of the business. She was also largely responsible for its operation.⁶

Prior to the accident, Ms. Burgess also helped her father with his tax and accounting practice. Ms. Burgess’s father is a chartered accountant who had recently retired from public accounting. He transitioned to a private accounting and tax practice in Bala in March 2006. Ms. Burgess had helped her father set up his private practice. She had also taken a tax preparation course through H&R Block so she could help him during tax season (winter through spring). It was her intention to continue to do so. Being located in cottage country, Docktails was largely a seasonal business (spring through fall).

Following the accident, Ms. Burgess did not make any attempt to return to work for at least a few weeks. Thereafter, and over time, Ms. Burgess eventually returned to performing some of her pre-accident tasks at Docktails, as well as doing some work for her father. However, Ms. Burgess maintains that, due to her accident-related impairments, she was never able to return to these positions on a full-time or competitive basis, and it was only with great assistance and indulgences from her parents that she was able to keep Docktails operating at all or continue to do any work for her father.

Docktails ultimately closed its doors as a retail store in March 2010,⁷ and Ms. Burgess did not work at Docktails or for her father’s practice thereafter. With the closing of Docktails, Ms. Burgess concentrated her efforts on academic upgrading, retraining to be an accountant in a certificate program at York University which she commenced in September 2010. She testified that, before the accident, it was not her desire to become an accountant, but she enrolled in the program because she hoped it was something she would be able to do even with her limitations. She noted that it would lead to a career that was sedentary, at least compared to the demands of an entrepreneur in the retail sector. She also had some relevant training and experience (from working for her father) and credits from a Bachelor of Commerce degree from McMaster University in 2002 that she could apply toward the program.

Ms. Burgess testified that the York program should have taken two full-time and one part-time semesters to complete, but she immediately felt overwhelmed by an 80% course load (4 courses) in her first semester and dropped two courses, leaving her with two courses (or 6 hours per week). For the remainder of the program, Ms. Burgess either took two courses (6 hours per week) or three courses (9 hours per week) each semester. As result, the program took five semesters to complete instead of three.

Notwithstanding the extra semesters it took, Ms. Burgess did complete the York program at the top of her class, and advised at the hearing that she was scheduled to start employment as a junior staff accountant at Soberman LLP, Chartered Accountants, the following week, i.e. October 1, 2012. Although she had yet to start or prove her ability to work at the Soberman position when the hearing began, it was agreed that my determination of whether Ms. Burgess was entitled to income replacement benefits would be time-limited to September 30, 2012.⁸

Ms. Burgess takes the position that, for first 104 weeks post-accident, she was substantially impaired in her ability to perform the essential tasks of her pre-accident employment. Thereafter, she maintains that she continued to suffer from a complete inability to engage in any employment for which she was reasonably suited by education, training and experience, at least up until her start date at Soberman. In fact, Ms. Burgess maintains that the post-accident work she did for Docktails and her father was of such diminished value that the payments she received should not be deducted from her IRB entitlement as “income from employment,” but should be more fairly characterized as gratuitous payments from generous parents.

For its part, Pembridge initially took the position that, based on her pre-accident income, Ms. Burgess was eligible for an IRB of $400 per week, but that the benefit was reduced to NIL as a result of net post-accident income. In making this determination, Pembridge relied on a report by Mr. Jeffrey Smith of BDO Dunwoody LLP dated April 10, 2008. Pembridge did not take the position that Ms. Burgess did not qualify for an IRB on the basis of disability until it issued an OCF-9 dated December 11, 2008, relying on an updated neurological IE report dated December 4, 2008.

Pembridge’s position has evolved over time; indeed, over the course of the hearing.

Pembridge no longer relies on Mr. Smith’s report for the calculation of any IRB that may be payable to Ms. Burgess. Mr. Smith conceded that there were serious flaws in his report and it should not be relied upon.⁹ As a result, Pembridge now accepts that any IRB should be calculated at $245.84 per week as calculated by the accountant retained by Ms. Burgess, Mr. Ian Wollach, in his report dated April 16, 2012.¹⁰ Still, at the commencement of the hearing, quantum continued to be identified as an issue, seemingly around the application of post-accident income.

As for entitlement on the basis of disability, Pembridge now takes the position that the financial information provided by Ms. Burgess establishes that she continued to work post-accident to a sufficient extent that I should find that she did not suffer a substantial inability to engage in her pre-accident employment for any period. This “primary submission” was not articulated until closing written submissions,¹¹ and is contrary to the parties’ agreement at the commencement of the hearing that the question of Ms. Burgess’ entitlement to IRBs on the basis of disability only ran from December 2008, when Pembridge determined that she was no longer entitled to IRBs on the basis of updated medical evidence. Only the issue of quantum was identified at the commencement of the hearing as stemming back to when Ms. Burgess would have first become eligible for IRBs, i.e. one week post-accident. Pembridge’s closing written submissions now challenge both entitlement and quantum back to this date. While I find Pembridge’s re-framing of the issue in closing submissions to be improper, for the sake of clarity and completeness, and since it does not affect the result, my decision covers both entitlement and quantum from August 6, 2007 (one week post-accident) to September 30, 2012 (when Ms. Burgess commenced employment with Soberman).

In its alternative arguments, Pembridge maintains that the period of disability should not extend beyond its OCF-9 of December 11, 2008. Pembridge also maintains that it is clear from Ms. Burgess’ post-accident work history, her successful academic upgrading, and her ability to secure a position at Soberman, that she did not suffer a complete inability to engage in any occupation for which she was reasonably suited for any period beyond 104 weeks post-accident.

Entitlement for the First 104 Weeks

Ms. Burgess is entitled to an income replacement benefit for the first 104 weeks post-accident (other than the first week for which no benefit is payable) if, for this period and as a result of the accident, she suffered a substantial inability to perform the essential tasks of her pre-accident employment.¹² For the following reasons, I am satisfied that Ms. Burgess has met this test.

i) The evidence of Ms. Burgess and her parents

The accident occurred mid-summer of Docktails’ first summer in business. As a fledgling entrepreneur, Ms. Burgess testified that she had been working long hours (often more than 10 hours per day, including many weekend days) trying to establish and grow her business. Her job tasks included kitchen preparation; cooking and baking food items; manually mixing batches of fudge; kitchen clean-up; maintaining the condition of the store; lifting and moving boxes of inventory; moving shelving units; restocking shelves with inventory; driving to suppliers; transporting goods from suppliers to the shop; standing at and operating the cash register; servicing customers; business planning and management; and bookkeeping tasks. As such, her pre-accident self-employment was both physically and mentally demanding, requiring stamina over long hours. I accept that, pre-accident, Docktails was principally managed and operated by Ms. Burgess with some part-time help from her mother that focussed mainly on food preparation, especially the fudge-making part of the business. Her father’s contribution was limited to occasional assistance with some heavier physical tasks.

After the accident, Ms. Burgess’ mother effectively took over the operation of the business. Part-time help was also employed to assist. Ms. Burgess’ father also helped out as needed.

Ms. Burgess testified that she first attempted a return to work at Docktails in September 2007, initially during off-hours when the business was closed. However, she continued to suffer from daily tension headaches, as well as migraine headaches several times per week. Her symptoms also included sharp, “slicing” neck and shoulder pain; cognitive issues, such as trouble focusing and word finding; and she fatigued easily. As a result, some days she would not go in at all. Other days she would go in, but turn around soon after and leave. Some days she would go in, but need to find a place to lie down for a while. When she did go in, Ms. Burgess testified that she would “consult” with her parents and “help out here and there.” Ms. Burgess’ mother testified that “Beth Ann frankly got in the way as much as she would help.” She also testified that she thought Beth Ann was there because she felt guilty, but she was easily distracted and she needed to be given lists of things to do and followed-up upon.

As noted, it was Ms. Burgess’ evidence, and the evidence of both of her parents, that at no time within 104 weeks of the accident was Ms. Burgess able to resume working at Docktails on a full-time or consistent basis. Although there may have been some gradual improvement over time, Ms. Burgess would have good days and bad days. While a very good day could see her working as much as 6 to 8 hours, there were still many other days when, as a result of her ongoing symptoms, she would only work an hour or two before going home or needing to lie down. Again, there were yet other days when she would not come in at all. In short, her attendance was unreliable and her hours highly variable.

The evidence was similar with respect to the part-time work Ms. Burgess did for her father’s accounting and tax practice. Ms. Burgess testified that she started going in to help her father in early 2008, but that it was not anything approaching the regular part-time work she did for him pre-accident. She did some small things, like install the annual tax software, but she was not engaged in more demanding tasks, such as preparing basic tax returns for her father’s review, like she used to do pre-accident. Mr. Burgess testified that Beth Ann did not work for him during the 2008 tax season, but a letter from Mr. Burgess to BDO in April 2008 confirmed that she began working for him in February 2008 with her hours varying “depending on medical treatments and appointments, migraine headaches and work in her own store.” I do not find this discrepancy significant. While Mr. Burgess may have taken a broad view of what constituted “work” in the April 2008 letter, both he and Ms. Burgess were consistent that her contributions to his business at that time were very limited, and she did not receive any income from her father for the 2008 tax season. Any time she put in was highly variable and unpredictable depending on how she was feeling.

Although Ms. Burgess came to be paid for services provided to her father in 2009 and 2010, Ms. Burgess and her father testified that (like Docktails) at no time within 104 weeks of the accident was Ms. Burgess able to return to working for her father on the same basis as she had been working for him pre-accident. Not only did her hours remain variable and unpredictable, the quality of her work, compared to the work she produced pre-accident, had deteriorated due to her pain and inability to focus. Ms. Burgess and her father testified that her father would check her work and frequently find errors. In fact, it was Mr. Burgess’ evidence that, had Beth Ann not been his daughter, he would not have kept her on as his employee.

In summary, Ms. Burgess and her parents testified that, while she eventually returned to performing some of her pre-accident tasks for both Docktails and her father, it was only with great assistance and indulgences from her parents that she was able to return in a limited capacity to doing some of her pre-accident work. They testified as to Ms. Burgess’ physical and cognitive limitations, her fatigue, her good days and bad days, her unreliable attendance, and her highly variable hours. Although there may have been some gradual improvement over time, their evidence is that Ms. Burgess did not return to working at either position on a basis comparable to what she had been doing pre-accident.

ii) Pembridge’s challenge to the credibility of Ms. Burgess and her parents

Pembridge challenges the credibility of Ms. Burgess and her parents. The challenge is based mainly on financial information provided by Ms. Burgess. Pembridge maintains that it contradicts Ms. Burgess’ assertion that she was substantially unable to work following the accident. For the following reasons, I disagree.

Pembridge’s primary position regarding the financial information is that the post-accident income paid to Ms. Burgess establishes that she had returned fairly quickly to her pre-accident level of employment.

I acknowledge that Ms. Burgess was paid not insubstantial amounts after the accident by both Docktails and her father. Docktails paid Ms. Burgess $6,651.37 in 2007, $8,032.88 in 2008, and a further $6,000.00 in 2009. While no income was paid in 2010 (the year Docktails shut down its retail operation), Ms. Burgess received a final “bonus” of $5,000.00 in 2011. As for work she did for her father, Ms. Burgess did not receive any income in 2008, but she was paid $10,703.60 in 2009, and $9,922.50 in 2010.

With respect to the amounts paid to Ms. Burgess by her father in 2009 and 2010, Mr. Burgess testified the payments were not a good measure of her ability to substantially perform the work she did for him pre-accident. Mr. Burgess testified that, as he had done pre-accident, he continued to track Beth Ann’s hours when she eventually returned to helping him in his practice, but that he was very generous with the hours recorded. Further, from the perspective of substantial inability, it is important to note that the issue was not only the number of hours worked or Ms. Burgess’ unreliability as an employee. The quality of her work was also an issue. As noted, Mr. Burgess testified that Beth Ann took longer to perform tasks and she made more mistakes. It was his evidence, therefore, that Beth Ann was paid considerably more than both the quantity and the quality of her contributions warranted.

Regarding the payments to Ms. Burgess by Docktails in 2008 and 2009, the situation was substantially the same. Ms. Burgess’ mother testified that Beth Ann’s attendance was unreliable, her hours variable, and her contribution to the business substantially diminished. While payments from Docktails may have represented a distribution of Docktails’ profits, they did not reflect Beth Ann’s contribution to the business or her capacity to engage in her pre-accident tasks. Docktails managed for a period despite Beth Ann’s limited contributions, not because of them. As for the $5,000 “bonus” paid to Ms. Burgess two years later in 2011, this payment followed Docktails’ closing the previous year. Mr. Burgess noted that, for tax reasons, income is always “wiped out” and attributed to the person in the lowest tax bracket; in this case, Beth Ann.

Pembridge made particular note of the $6,651.37 paid by Docktails to Ms. Burgess in October through December 2007. Pembridge identified that this was not only paid within just a few months of the accident, but it is the same amount recorded in Ms. Burgess’ T4 from Docktails for 2007, suggesting that all of her 2007 income from Docktails was earned post-accident.

In response, Ms. Burgess and her father testified that the cheques to Ms. Burgess in October through December 2007, and reflected in the T4, were issued to pay out grant money that had been made available to Ms. Burgess through the Industrial Research Assistance Program (IRAP) administered by Industry Canada for Young Entrepreneurs. Mr. Burgess testified that he advised the program of his daughter’s accident, and although he was not discouraged from making submissions for the full amount of the grant, the amounts issued to Ms. Burgess did not represent the full amount that was available.

Mr. Wollach did not include the grant amount in his calculations. Mr. Wollach testified that he only attributed income to Ms. Burgess for periods when it was his understanding that she “actually worked.” It was his understanding that Ms. Burgess’ contribution to Docktails in the winter of 2007/2008 was limited to “only performing some research work,” and she only came in to Docktails on an occasional, sporadic basis. He did not attribute post-accident income to Ms. Burgess until the spring/summer of 2008, which is when he understood that she began contributing more to the business and started earning some income again.

Pembridge’s own accountant, Mr. Smith, acknowledged that income should only be attributed to Ms. Burgess for those periods when she was actually working. In the BDO report of April 10, 2008 (which Mr. Smith has since disavowed as unreliable for other reasons), Ms. Burgess’ post-accident income is calculated on the basis of a listing of Docktails’ monthly revenues for the six month period from August 2007 to January 2008. Even though it is clear that Ms. Burgess did not return to Docktails in any capacity whatsoever until at least mid-September, August revenues (the best of the six months considered) were attributed to Ms. Burgess in the calculation of her post-accident income. Mr. Smith’s admission that this should not have been done if Ms. Burgess was not working provides yet another reason for not relying on his report. The fact that August revenues were the best month also speaks, at least in part, to the extra efforts put into the business by Ms. Burgess’ parents, especially her mother, after the accident.

As for Pembridge’s submission that the T4 issued by Docktails for 2007 points to all of Ms. Burgess’ income from Docktails being earned post-accident, I note that Pembridge has accepted Mr. Wollach’s figure of $245.84 per week as correctly representing 80% of Ms. Burgess’ pre-accident net weekly income.¹³ Mr. Wollach’s calculation is not based on Ms. Burgess’ 2007 tax return. The calculation is based on Docktails’ revenue and expenses for the 52 week period pre-accident. Together with income earned from her part-time work with her father in the same 52 week period, Mr. Wollach arrived at a figure of $245.84 per week. It is difficult to understand how, on the one hand, Pembridge accepts that Ms. Burgess’ pre-accident income is properly calculated at $245.84 per week based on Docktails’ pre-accident revenue and expenses, while, on the other hand, submitting that “Ms. Burgess earned all of her [2007] income from Docktails post-accident. Thus, there is no pre-accident income earned from Docktails.”¹⁴

As demonstrated by the above, a significant problem with Pembridge’s position (that certain financial records establish that Ms. Burgess was not substantially unable to perform the essential tasks of her employment) is that it relies heavily on counsel’s own analysis and interpretation of selected financial records (as set out in closing submissions) rather than being supported by an expert opinion contained in an updated accounting report.

Pembridge had an opportunity to get an updated report from Mr. Smith after Ms. Burgess provided additional financial information in October 2011. In fact, the additional information was provided by Ms. Burgess on the understanding that Pembridge would submit it to BDO for a review of her entitlement to IRBs for the period from February 1, 2008 to December 11, 2008 (when Pembridge determined that Ms. Burgess was no longer entitled to IRB s on the basis of disability).¹⁵ For whatever reasons, Pembridge chose not to provide BDO with the additional information. Admittedly, Pembridge had requested the information from Ms. Burgess in January 2011, following the mediation in this matter, and did not receive it until several months later.¹⁶ Still, I find it troubling that the information was not provided to BDO once it was finally received.

I find it equally troubling that Pembridge misleadingly states (in its closing submissions) that the information provided by Ms. Burgess in October 2011 was information that Ms. Burgess had unexplainably withheld for 4 years,¹⁷ and suggests that it was this new information that led BDO to recant its initial calculation of IRBs and instead agree with Mr. Wollach’s calculation of $245.84 per week.¹⁸ As noted, Ms. Burgess provided the additional information in response to a post-mediation letter from Pembridge in January 2011, years after Pembridge had terminated her IRBs on the basis of both post-accident income and disability. I heard no evidence that Pembridge had made any requests for additional financial information between April 2008 (when BDO issued its report) and the January 2011 letter. As for the error in the initial calculation of IRBs, it was based on a failure to take into account cost of sales figures. Mr. Smith testified that it was a problem that should have been readily apparent at the time the initial calculation was made. It had nothing to do with information subsequently provided by Ms. Burgess in 2011. In any event, Mr. Smith was never asked to review the additional information.

Pembridge also challenged the credibility of Ms. Burgess and her parents on other matters unrelated to the post-accident financial information. In that regard, Pembridge pointed to the fact that Ms. Burgess’ LinkedIn profile in May 2011 continued to represent her as an entrepreneur and also as an office manager and tax preparer for her father. Pembridge also pointed to the fact that Mr. Burgess gave Beth Ann a positive reference when contacted in respect of her application for a position at Soberman, even though he testified that he had concerns about Beth Ann’s ability to work in a challenging and competitive environment. There is also a letter from Mr. Burgess addressed “To Whom It May Concern” dated January 9, 2007 (pre-dating the accident) that states Beth Ann was then “currently employed as a full time employee” making a “current salary” of “$31,200.00 per annum,” when the evidence is that Ms. Burgess always worked for her father on a part time basis making much less than $31,200 in a year.

I find these points raised by Pembridge to be quite minor, and they did not significantly affect my credibility assessment of Ms. Burgess and her parents.

Regarding Ms. Burgess’ LinkedIn profile, I note that LinkedIn is a social media site used for networking and professional marketing. It also permits the posting of what is essentially an online résumé. As such, it is not a forum where one would expect career challenges or setbacks to be advertised or highlighted. I also note that, at the time Pembridge checked her LinkedIn profile in May 2011, Ms. Burgess was trying to rebuild her life. She was pursuing academic upgrading, and it was her hope to eventually get work as an accountant. While perhaps stretching the truth, I do not find it particularly surprising or troubling that Ms. Burgess’ LinkedIn profile continued to represent her as working for Docktails and her father, without referencing any interruption in her work history (or reduction in her duties or hours of work) as a result of the accident.

As for Mr. Burgess’ positive reference for the job at Soberman, Mr. Burgess admitted that he painted a “rosy picture” of Beth Ann to help her get the job. As he put it, “I am her father.” He agreed that he did not tell Soberman that Beth Ann had been unreliable, but he also noted that by that time (2012) it had been a couple of years since she had worked for him. Beth Ann had gone back to school in the intervening period, and while he was still not confident that she would be able to handle a full time job in a competitive environment, he had seen improvements in certain areas of her life, and he was hopeful. I found Mr. Burgess’ ready admission that he did what he could to help Beth Ann get the job at Soberman refreshingly candid. I did not find it harmed his credibility. In fact, it would have provoked greater concern to his credibility if he had suggested that he had not put Beth Ann in the best possible light.

As for the letter that referenced Ms. Burgess as working full time for her father in January 2007 at a salary of $31,200.00 per annum, Mr. Burgess testified that the letter simply took a weekly salary of $600 per week and “grossed it up” to reflect what her salary would be on an annualized basis, although he agreed that he would not have expected Beth Ann to work on a full time basis throughout 2007. However, at the time the letter was written, Ms. Burgess would have been working relatively full time hours, as her father’s practice would have been entering its busiest season. As for the letter providing a gross up of what Ms. Burgess’ salary would be if she were to work full time for a full year (even if that was not the expectation when the letter was written), I find it provides little basis for impugning Mr. Burgess’ evidence at this hearing.

In summary, I did not find Pembridge’s challenge to the credibility of Ms. Burgess and her parents to be persuasive. While I agree that, given its non-arm’s length nature, their evidence needed to be approached with caution, I find it withstood a careful review. Over several days of hearing, I found the testimony of Ms. Burgess and her parents, taken as a whole, to be straightforward, clear and believable. Their answers were measured and thoughtful, but without appearing contrived. They withstood cross-examination well. Each gave evidence that was internally consistent, and consistent as between them.

Further, the evidence of Ms. Burgess and her parents did not stand alone. It was also supported by the preponderance of the medical evidence.

iii) The Medical Evidence

Although Pembridge cross-examined Ms. Burgess regarding a few pre-accident incidents and injuries, I found nothing in her pre-accident history to suggest that she was suffering from any ongoing complaints or restrictions that would have had any material impact on her level of functioning. In fact, at the time of the accident, the evidence points to Ms. Burgess being quite active and healthy, both physically and psychologically.

Following the accident, Ms. Burgess suffered significant and ongoing pain (especially neck and shoulder pain, and headaches) as well as cognitive issue, fatigue and disturbed sleep. Her complaints are well-noted in the clinical notes and records. Ms. Burgess attempted to treat her pain symptoms with various forms of therapy (physiotherapy, chiropractic, acupuncture, massage therapy, laser therapy, and nerve block injections) and took various prescription medications. However, Ms. Burgess was unable to achieve sufficient relief by these means and, in September 2008, she underwent a surgical procedure called a facet rhizotomy by Dr. Faclier at Sunnybrook. As noted, a rhizotomy involves the insertion of heated wires to destroy pain carrying nerves in the cervical spine. The decision to proceed with a rhizotomy was based on an assessment by Dr. Shapero who administered a series of cervical facet joint diagnostic nerve blocks which proved positive at the left C2-5 levels.

Pembridge first assessed Ms. Burgess with respect to the pre-104 week disability test for IRBs in May 2008 (approximately four months prior to her first rhizotomy). At that time, Ms. Burgess was seen by Dr. Best, neurologist, and Dr. Zeldin, orthopaedic specialist.

Dr. Best found that Ms. Burgess was suffering from functional limitations that could interfere with a return to work, including difficulties with concentration and memory. He noted that she had returned to work on a half time or half hours basis. He expressed the hope that Ms. Burgess could increase the number of hours by one hour per month. As a result of this report, Pembridge did not terminate IRBs on the basis of disability.

Dr. Zeldin’s brief report concluded that Ms. Burgess had gradually increased her activity since the accident. There is no mention of the number of hours she was working, but, on cross-examination, Dr. Zeldin said that, based on the wording in his report, he assumed she was back to her normal hours. He could not explain Dr. Best’s report that Ms. Burgess was back to half hours. He also could not explain why his report recorded significantly fewer symptoms than those recorded by Dr. Best or contained in other contemporaneous clinical notes, other than perhaps that Ms. Burgess did not communicate them to him.

At Pembridge’s request, Ms. Burgess was seen again by Dr. Best in December 2008 (approximately three months after her first rhizotomy). Dr. Best noted some improvements, especially related to migraine headaches. She continued to have neck and shoulder pain and general tension headaches, although these were also reduced. At the same time, Dr. Best noted that there had been little change in Ms. Burgess’ concentration and memory complaints, and she continued to suffer from extreme fatigue and nightmares. He diagnosed a possible sleep disorder. Although he found that she continued to have symptoms substantially similar to complains identified in his earlier assessment, Dr. Best concluded that Ms. Burgess had made progress, and her ongoing complaints were likely not related (or at least no longer mainly related) to the accident. As a result, Dr. Best found that Ms. Burgess no longer suffered from a substantial inability to return to her pre-accident employment. On the basis of this follow-up assessment, Pembridge terminated Ms. Burgess’ entitlement to IRBs on the basis of disability in an OCF-9 dated December 11, 2008.

Dr. Best’s conclusion that Ms. Burgess could return to her pre-accident employment is problematic on a number of fronts. First, he did not comment on the work Ms. Burgess had been doing and, on cross-examination, stated that he arrived at his conclusion on the understanding that Ms. Burgess was working as an accountant. He does not appear to have considered her work as owner/operator of Docktails. Dr. Best also testified that, according to his understanding, “substantial inability” means being able to do less than 50% of a job.¹⁹ It was his opinion therefore that Ms. Burgess was capable of doing 51% or more of the tasks of an accountant. However, he could not say how much more than 51%. Dr. Best also testified that Ms. Burgess’ ongoing cognitive symptoms, fatigue and sleep disorder could be attributed to a number of factors not related to the accident, such as the stress of her job as an accountant and weight gained after stopping the drug topiramate following her first rhizotomy.²⁰ However, Dr. Best’s evidence was not clear regarding how much weight Ms. Burgess may have gained after she stopped taking topiramate.

I find that Dr. Best’s opinion that Ms. Burgess’ ongoing symptoms were likely no longer mainly related to the accident was, in large part, a reflection of his expectation that Ms. Burgess’ post-concussive symptoms should have resolved by the time of his second assessment. As stated in his December report, “the contribution from the motor vehicle accident itself is fading into the distant past, or should be at least.” [my emphasis] Dr. Best did admit on cross-examination that, in a minority of cases, post-concussive symptoms linger, and he agreed that this was possibly the case with Ms. Burgess, although he resisted that conclusion.

In April 2009, Ms. Burgess was assessed at her counsel’s request by Dr. Kurzman, a neuro-psychologist, over a full-day session. Although above average on some cognitive tests, she was noted to have starkly contrasting deficits in other areas, including visual motor tracking and selective attention, interference and distractibility. He also noted that “her performance tests of complex attention were significantly impaired” and “mental arithmetic is difficult for her.” His diagnoses included post-concussive syndrome. Dr. Kurzman noted that Ms. Burgess reported that, for the first year following the accident, her mother had managed Docktails, and they managed it together the following year.

Ms. Burgess was also assessed at her counsel’s request by Dr. Kleinman, a physiatrist, in July 2009. Dr. Kleinman noted two kinds of headaches and ongoing sharp burning sensations in Ms. Burgess’ cervicothoracic spine on a daily basis with burning referral pain to her neck and shoulder blades, aggravated by movements of the neck and upper back. He also noted that the benefits of the first rhizotomy were wearing off since April or May 2009. Although Ms. Burgess reported working up to 7 hours some days, Dr. Kleinman also noted that this was on a limited basis and depended on how she was feeling. Overall, Dr. Kleinman opined that, given the nature and severity of her pain complaints, her physical limitations, and her propensity to fatigue easily, Ms. Burgess should be considered substantially disabled from engaging in her pre-accident employment.

In December 2009 (shortly beyond the post-104 week mark), Ms. Burgess was again assessed at her counsel’s request by Dr. Dimitrakoudis, neurologist, who agreed with the diagnosis of concussion with post concussive syndrome. He noted that Ms. Burgess continued to suffer from ongoing neurocognitive complaints and objective deficits. He concluded that her ongoing headaches, organizational difficulties, emotional lability, and pain symptoms prevented her from resuming her usual work activities. In short, she was substantially unable to engage in her pre-accident employment.

In summary, Pembridge terminated IRBs on the basis of Dr. Best’s follow-up assessment in December 2008. The assessment is fraught with problems, including a misapprehension of Ms. Burgess’ pre-accident employment and the test of disability, as well as what seemed to be a bias toward the conclusion that Ms. Burgess’ recovery from post-concussive syndrome should have followed the rule, rather than the exception. Countering this was Ms. Burgess’ evidence of ongoing extensive treatment and use of medications, eventually leading to a rhizotomy which resulted in reasonably good, although time-limited, relief. Ms. Burgess also offered expert evidence that she continued to suffer from significant ongoing physical and cognitive impairments from assessors who appeared to have a better appreciation of both the tasks that made up her employment and the test of disability.

For the above reasons, I preferred Ms. Burgess’ medical evidence (Drs. Shapero, Kurzman, Kleinman and Dimitrakoudis) to Pembridge’s evidence (Drs. Best and Zeldin).

iv) Conclusion re Entitlement for the First 104 Weeks

On the basis of all of the foregoing, I am persuaded, on a balance of probabilities, that Ms. Burgess was substantially unable to perform the essential tasks of her pre-accident employment for the first 104 weeks post-accident.

Entitlement Beyond 104 Weeks

Ms. Burgess is not entitled to IRBs for any period longer than 104 weeks of disability, unless, as a result of the accident, the insured person is suffering a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience.²¹

While this disability test is more strict than the test for the first 104 weeks, the case law is clear that any employment must not only be reasonably suited by education, training or experience, but the insured person must be able to engage in any such employment in a competitive, real- world setting, taking into account employer demands for reasonable hours and productivity.²²

Although Ms. Burgess continued to have good days, I accept the evidence of Ms. Burgess and her parents that she remained unable to work in a sustained and reliable way at both Docktails and her father’s practice beyond 104 weeks post-accident. I also accept that by the end of 2009, Ms. Burgess and her parents had discussed closing down Docktails, and Ms. Burgess began to turn her sights on a return to school for academic upgrading and retraining, so she could move on with her life.

I also note that, notwithstanding some improvements, Ms. Burgess continued to receive considerable treatment post-104 weeks. She also continued to take several over-the-counter and prescription medications. It is also significant that Ms. Burgess underwent a second rhizotomy in March 2010, around the same time as Docktails closed. The improvements from the first rhizotomy had worn off and Ms. Burgess was troubled enough by her neck and shoulder pain to undergo this invasive procedure a second time.

Ms. Burgess’s ongoing physical and neurological symptoms are also supported by Drs. Kleinman and Dimitrakoudis who saw Ms. Burgess again in May 2012. At this point, nearly five years post-accident, Dr. Kleinman opined that Ms. Burgess continued to suffer from chronic mechanical pain in the cervicothoracic spine; chronic soft tissue sprain/strain to the cervicothoracic spine; chronic spinal reconditioning; and, chronic post-traumatic headaches. Dr. Kleinman attributed the closing of Docktails to Ms. Burgess’ ongoing difficulties. Notwithstanding her retraining, he also expressed concern about her ability to work full days, and suspected that her condition would deteriorate over the course of a work week. Dr. Dimitrakoudis was also guarded in his prognosis. While noting some improvement, he found that Ms. Burgess had “essentially the same list of problems she had when she was last seen in 2009.” He noted that Ms. Burgess’ ongoing symptoms included pain complaints, especially her left neck and shoulder; ongoing concerns with impaired concentration, especially in noisy environments or places with many people; emotional lability, frustration and frequent crying; balance impairment and clumsiness; and recurrent nightmares. Considering these factors, Dr. Dimitrakoudis concluded:

… on the basis of her significant ongoing symptoms, she does appear to have a complete inability to engage in any employment or self-employment for which she is reasonably suited by education, training, or experience. Although she recently completed an accountant training program, she has not worked as an accountant in the community and I expect she may have difficulty doing this type of work.

Pembridge did not conduct any further IRB-related assessments after Dr. Best’s follow-up assessment in December 2008.

In terms of her pre-accident education, training and experience, Ms. Burgess has a Bachelor of Commerce; food preparation and safety certifications; two levels of certification as a sommelier; and, an accounting certificate earned through part-time study. Her employment experience includes work as a bartender; conducting promotions for a brewery; managing a group of delicatessens; supervising a group of meeting rooms and banquet halls and coordinating guest services; managing an inn; and, of course, her work at Docktails and her father’s accounting and tax practice.

Pembridge did not lead evidence as to other jobs Ms. Burgess could do, but I am satisfied that any jobs suited to Ms. Burgess by virtue of her education, training and experience would have required physical and/or mental demands, and a degree of stamina and/or irregular work hours, beyond Ms. Burgess’ functional ability. I am satisfied on the evidence presented that Ms. Burgess was completely unable to engage, in any sort of sustained or reliable way, in any alternative employment for which she was reasonably suited.

As for her return to school, I find it reasonable and commendable that Ms. Burgess took steps to pursue and complete academic upgrading and retraining. I acknowledge that Ms. Burgess did very well, but it is also clear that she took substantially longer than normally required to complete the program (five semesters instead of three). It may be that her physical, mental and emotional health continued to improve during the period of her studies (between the fall of 2010 and the spring of 2012), but I do not believe that Ms. Burgess should be penalized for her efforts to move on with her life. More importantly, I do not agree that Ms. Burgess’ ability to succeed at part-time studies, helped along by significant accommodation and pacing, translates into an ability during that period to engage in steady, suitable employment in a competitive environment. On the contrary, her inability to maintain more than 40% to 60% of a full workload in the York program is evidence that she was not capable of competitive, full-time employment during this time.

I also find it was only with the completion of her academic upgrading, ongoing treatment (including the two rhizotomies), the support of her parents, and, more generally, the passage of time, that Ms. Burgess was able to secure a position that was reasonably suited to her, i.e. a junior staff accountant position at Soberman LLP. Even then, Ms. Burgess’ ability to withstand the demands of the position at Soberman remained unproven at the commencement of the hearing, as she was not scheduled to start the job until the following week on October 1, 2012. Given Ms. Burgess’ return to suitable employment, and in order to crystallize the issue, it was agreed that my determination of whether Ms. Burgess was entitled to income replacement benefits would be time-limited to September 30, 2012.

In conclusion, and for all of the above reasons, I am satisfied, on a balance of probabilities, that Ms. Burgess was completely unable to engage in any employment for which she was reasonably suited by education, training and experience from 104 weeks post-accident to September 30, 2012. I make no finding beyond that date.

Quantum of IRBs

I accept the quantum of weekly income replacement benefits set out in Schedule 2 of the report of Ian Wollach dated April 16, 2012.

Mr. Wollach arrived at $245.84 per week as the figure for 80% of Ms. Burgess’ pre-accident net weekly income. Pembridge accepted this figure in its closing submissions, and Mr. Smith, the accountant retained by Pembridge, conceded that Mr. Wollach’s report contained further and better information than his own report which he acknowledged was “flawed” and should not be relied upon.

From the base IRB amount of $245.84 per week, Mr. Wollach deducted 80% of amounts received by Ms. Burgess from Docktails and her father in the post-accident period. Ms. Burgess’ counsel submitted that the amounts received by Ms. Burgess post-accident should not be deducted from her IRB entitlement as the amounts received were not “income… in respect of any employment.”²³ Instead, counsel submitted that Ms. Burgess’ contributions to Docktails and her father’s business were of such limited value that the amounts paid to her should be characterized as gratuitous payments from her parents. I disagree.

While I recognize that there have been cases where post-accident payments have been “little more than a non-arm’s length gift masquerading as income from parents who fortunately … have been able to create that fiction,”²⁴ I find that it would be overreaching to characterize the payments received by Ms. Burgess in that same light. Ms. Burgess was not able to engage in her pre-accident employment (or any suitable employment) in a sustained and reliable way that would suffice in a competitive environment, but I do not find that her contributions were without value. The payments made to Ms. Burgess may have exceeded the true value of the work provided by her, but I do not accept that she played “no viable role in [Docktails] day to day business or ongoing governance” or that her contributions to Docktails and her father’s business were simply attempts to keep her busy or maintain her self-esteem.²⁵ On the facts of this case, I accept as appropriate Mr. Wollach’s deductions for post-accident income.

Pembridge took issue with the fact that Mr. Wollach attributed post-accident income from Docktails entirely to the months of July and August (in years 2008 and 2009), and post-accident income earned from her father’s business to months when she wasn’t earning income from Docktails (in years 2009 and 2010). While this no doubt oversimplifies the reality, I heard no evidence that would lead me to conclude that Mr. Wollach’s approach was unreasonable or improper, and I accept it.

Entitlement to Transportation Expenses

Ms. Burgess is entitled to all reasonable and necessary expenses for transportation to and from treatment sessions, other than the first 50 kilometres of transportation.²⁶

Ms. Burgess claims transportation expenses in the total amount of $5,719.09 comprised of claims for $3,652.84; $761.33; $228.44; $775.20; $178.70; and $123.08. The claims cover multiple years, and relate to trips to a variety of locations (Richmond Hill, Unionville, North York, Toronto, Aurora, Bracebridge) for a variety of medical treatments and assessments. A round-trip to any of these locations from Bala, where Ms. Burgess was living at the time, is in excess of 300 kms, other than Bracebridge which is approximately 80 kms round-trip.

Bala is a small, Muskoka community of approximately 1,000 year-round residents. I heard evidence that, being a small, seasonal community, Bala did not have all of the health care professionals required to assess and treat Ms. Burgess for her accident-related medical needs. As a result, she was required to travel outside Bala. Pembridge submitted that it was not reasonable to travel “all the way to Toronto” to receive treatment, but I did not receive evidence of suitable alternate health care professionals located closer to Bala. I accept Ms. Burgess’ evidence that the transportation expenses she incurred were reasonable and necessary in order to access and exercise choice of treatment providers who were able to offer her effective symptom relief.

On review of the several OCF-6 submissions that comprise the transportation claims, I note that the submissions properly deduct the first 50 kms of travel. I am also satisfied that most of the claims are related to treatment for the accident. One exception is the claim for $228.44 which included two trips to Bracebridge to put on/remove a heart monitor. I did not receive sufficient evidence to persuade me that this item was accident-related, and I do not allow it. The claim is therefore reduced by the transportation expenses related to the heart monitor: $16.80 for travel and $10 for parking.

In the result, I find that Ms. Burgess is entitled to transportation expenses in the amount of $5,692.29.

Ms. Burgess is entitled to the cost of examinations that are reasonably required in connection with a benefit that is claimed or in connection with the preparation of a treatment plan.²⁷

Ms. Burgess claims $2,513.72 for the cost of a diagnostic cervical facet assessment recommended by Dr. Shapero in an OCF-22 dated April 22, 2008. The assessment consisted of a series of palliative nerve block injections into the cervical facet joints, before and after which a subjective pain rating was obtained. By comparing pain ratings before and after the injections at each level, the assessor is able to determine which facet joints, if any, are involved in the cervical pain. This assists in developing an appropriate course of treatment. The rationale for the assessment is explained in three reports each dated April 18, 2008.²⁸

Ms. Burgess proceeded with the assessment notwithstanding Pembridge’s refusal to fund it. The assessment revealed cervical facet joint involvement at the left C2-5 levels. This formed the basis of the recommendation for the rhizotomies that were performed by Dr. Faclier in September 2008 and again in March 2010. In each case, Ms. Burgess enjoyed significant, although not complete or permanent, symptom relief.

Pembridge refused to fund the cervical facet joint assessment on the basis of a paper review by Dr. Platnick, M.D. In his very brief report of May 5, 2008, Dr. Platnick concluded that there was “no convincing rationale” for the assessment, although it does not appear from his summary of documents reviewed that he had the three reports of April 18, 2008 available to him. In any event, I find that, given the chronic headaches and neck and shoulder pain that Ms. Burgess was continuing to experience at the time, and the limited results she was receiving from active and passive therapies, it was reasonable and necessary to investigate the possibility of cervical facet joint involvement as recommended by Dr. Shapero in his OCF-22 dated April 22, 2008. Ms. Burgess is therefore entitled to payment in the amount of $2,513.72 for the cost of the assessment.

Special Award

Toward the end of the hearing, Ms. Burgess requested that a claim for a special award be added to the arbitration. The request was granted on the basis that Ms. Burgess would provide particulars of the claim, in writing. Pembridge was offered the opportunity to call witnesses, including its adjuster, to respond to the claim, including any reasonable adjournment that this may require. Particulars were provided by Ms. Burgess, but Pembridge did not choose to call any witnesses or tender any additional evidence on the issue of a special award. Pembridge communicated that it was satisfied to have the issue determined on the basis of the evidence already forming the record.

Ms. Burgess is entitled to a special award where there is a finding that benefits have been “unreasonably withheld or delayed” in an amount “up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.”²⁹

The question of whether an insurer’s withholding of or delay in paying a benefit is “unreasonable” is fact-driven and highly dependent on the arbitrator's view of the evidence.³⁰ The sort of conduct that would constitute “unreasonable” behaviour includes “excessive, imprudent, stubborn, inflexible, unyielding or immoderate” behaviour.³¹

In this case, Ms. Burgess claims a special award in respect of Pembridge’s failure to pay IRBS, transportation expenses, and the cost of the diagnostic cervical facet assessment.

With respect to the latter two benefits (transportation expenses and the cost of the assessment), I agree that Pembridge’s denials were wrong and its conduct problematic. Still, I am not satisfied that Pembridge’s conduct in respect of these benefits rises to the level contemplated for a special award. However, for the reasons that follow, I do find that a special award is warranted with respect to a portion of the IRBs payable. Specifically, I find that the withholding of IRBs for the period from August 6, 2007 to December 11, 2008 became unreasonable no later than 30 days after Pembridge’s receipt of the additional financial information provided by Ms. Burgess with her letter of October 10, 2011.

As noted above, Pembridge only determined that Ms. Burgess was not entitled to IRBs on a medical basis in December 2008.³² Prior to then (i.e. for the period from August 6, 2007 to December 11, 2008), Ms. Burgess was not paid an IRB on the basis of Mr. Smith’s accounting report of April 10, 2008 which concluded that any IRB was reduced to $0 as a result of post-accident income.

As Mr. Smith’s report only considered financial information up to January 31, 2008, Pembridge agreed at the mediation on January 18, 2011 to have Mr. Smith review updated financial information to determine whether Ms. Burgess was entitled to an IRB from February 1, 2008 to December 11, 2008.³³

I heard evidence that, given this is a self-employment situation, it would have been reasonable for Pembridge to have had Mr. Smith periodically review Ms. Burgess’ post-accident income, at least up until the time that it had determined that she was no longer entitled to an IRB on the basis of disability, and certainly sooner than the mediation in January 2011. I agree, but I do not see this oversight as being sufficient, on its own, to warrant a special award.

The matter of greater concern is that, even once the updated information was provided by Ms. Burgess with her letter of October 10, 2011, Mr. Smith was never asked to review it and provide an updated report. Notwithstanding the delay in receiving the information, I find it unacceptable and unreasonable that Pembridge did not provide the information to Mr. Smith once it was received. It was Mr. Smith’s own evidence that the flaws in his initial report should have jumped off the page at him. A review of the updated information would have required Mr. Smith to revisit his initial report. I am satisfied that this would have revealed the report’s flaws and resulted in IRBs being found payable.

I therefore find that Ms. Burgess is entitled to a special award in respect of IRBs withheld for the period from August 6, 2007 (one week post-accident) to December 11, 2008 (when Pembridge determined that Ms. Burgess was no longer entitled to IRBs on a medical basis). I find that Pembridge’s conduct in withholding IRBs for that period became unreasonable no later than 30 days after Pembridge’s receipt of the additional financial information provided by Ms. Burgess with her letter of October 10, 2011.

The leading case on the proper approach to the calculation of special awards is Liberty Mutual Insurance Company and Persofsky.³⁴ The calculation begins by first determining the amount of the benefits unreasonably withheld, plus applicable interest. The maximum permissible special award can then be determined by “adding the additional interest component in s. 282(10) two per cent per month, compounded monthly. To be clear, this calculation includes interest on the unpaid SABS interest. The maximum special award is 50 per cent of this total.” With at least an approximation of the maximum amount in mind, a lump sum is to be awarded, guided by principles of rationality and proportionality.

As noted above, I find that IRBs are payable in accordance with Schedule 2 of Mr. Wollach’s report dated April 16, 2012. Looking to Schedule 2, the principal amount of the IRBs that are subject to the special award (IRBs for the period from August 6, 2007 to December 11, 2008) are approximately $15,000. I do not find it necessary to calculate the maximum permissible special award with any degree of precision. It is safe to say that, with interest (and additional special award interest on all amounts), the maximum award would be considerably higher than the $10,000.00 that I find to be a) proportional to the misconduct in issue, and b) rationally related to the purposes of a special award which are punishment and deterrence.

Procedural Rulings

At the commencement of the hearing, Ms. Burgess advised that Pembridge had failed to respond to various emails, letters and voicemails in the days, weeks and months leading up to the hearing that were aimed at clarifying the documents each party would be relying on at the hearing and the witnesses each party would be calling.³⁵ Finally, on the Thursday before the hearing, Pembridge advised Ms. Burgess of the witnesses it intended to call. On the Friday before the hearing, Pembridge served a brief of the documents it intended to file. However, by the commencement of the hearing, Pembridge had still not notified Ms. Burgess of the expert witnesses it wished to cross-examine. In the circumstances, Ms. Burgess requested an order that Pembridge’s document brief be excluded and that it not be permitted to cross-examine her witnesses.

Pembridge first responded by suggesting that Ms. Burgess should have presumed that it would be relying on all of its insurer examinations and would require all of her expert witnesses to be made available for cross-examination. I disagree. The parties are expected to work cooperatively to help make the arbitration process streamlined and efficient. Otherwise, the parties are put to unnecessary expense and impeded in their ability to prepare for hearing. Pembridge then suggested that its failure to respond was an oversight. I did not accept this explanation. There were simply too many communications over too long a period to be explained as an “oversight.”

Failure to Identify Documents or Cooperate in Preparation of Joint Brief

Dealing first with the failure to identify in a timely manner the specific documents that it intended to rely on, I note that Rule 39.1 provides that “Subject to Rule 39.2 [extraordinary circumstances], all documents, reports (including experts' reports) and assessments to be introduced at a hearing by either party must be served on the other party at least 30 days before the first day of the hearing.”

The difficulty with this provision is that it does not contain a specific requirement for delivery of a document brief, or notice of the specific documents that a party intends to rely on, in advance of the hearing.³⁶ It simply provides that the documents “must be served on the other party at least 30 days before the first day of the hearing.” [my emphasis]

It was admitted that, subject to some deficiencies that are not germane to these reasons, the reports that Pembridge sought to introduce and rely on were provided to Ms. Burgess long before the hearing. As such, I found that I was unable to invoke Rule 39.1 to exclude the documents that Pembridge sought to introduce. I would have considered a short adjournment to address any prejudice to Ms. Burgess, but none was requested.

Failure to Identify Witnesses

The issue of exclusion of witnesses is governed by different provisions of the Rules. Rule 41.1 provides that “Each party must provide the other parties with the names of witnesses that the party intends to call and the names of persons the party requires to attend for cross-examination on a report, at least 30 days before the first day of the hearing.”

Rule 42.2 dealing with Expert Witnesses provides that “The time lines and requirements set out under Rule 39 and Rule 41 apply.” As for remedial relief, Rule 42.3 provides that “Where a party does not comply with the requirements of this Rule, an arbitrator may exclude a witness from the hearing or make such other order as the arbitrator considers just.”

While I was not prepared to exclude Pembridge’s expert reports, I exercised my discretion to exclude Pembridge from calling its experts to give viva voce evidence, subject to Ms. Burgess’ right to have the authors attend for cross-examination.

I also found that Pembridge was precluded from requiring that Ms. Burgess make her experts available for cross-examination on their reports. However, in the event that Ms. Burgess did call any of her experts to give viva voce evidence, Pembridge would not be precluded from cross-examining those witnesses.

EXPENSES:

The parties made no submissions on expenses. In addition to being almost entirely successful on the issues at hearing, I note that Ms. Burgess was granted her costs in any event of the cause for the first day of the hearing (spent dealing with the procedural matters above). If the parties are unable to resolve the issue of expenses between themselves, either party may request that I determine the issue in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

June 6, 2014

Robert Bujold Arbitrator

Date

Financial Services Commission of Ontario