Jaromir “Mike” Kozumplik v. Aviva Canada Inc., 2015 ONFSCDRS 34

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 34

Appeals P14-00022A and P14-00022C

OFFICE OF THE DIRECTOR OF ARBITRATIONS

JAROMIR “MIKE” KOZUMPLIK

Appellant / Cross-Respondent

and

AVIVA CANADA INC.

Respondent / Cross-Appellant

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Ms. Leanne Storms for Aviva Canada Inc.

Mr. Douglas M. Bryce for Mr. Jaromir “Mike” Kozumplik

HEARING DATE:

January 14, 2015 in London Ontario

PRELIMINARY APPEAL ORDER

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

1. Both appeals are allowed. The Arbitrator’s May 9, 2014 decision is rescinded and the matter is remitted to arbitration for a new hearing.

2. If the parties cannot agree on the legal expenses of this appeal, an appeal expense hearing shall be requested, as set out below, within forty-five days of the date of this decision.

February 26, 2015

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND AND NATURE OF THE APPEAL

Mr. Jaromir “Mike” Kozumplik was injured in an August 29, 2004 motor vehicle accident. As a result, he sought statutory accident benefits under the 1996 Schedule¹ from his first-party automobile insurer, Aviva Canada Inc.

An eight-day arbitration hearing was initially scheduled in this matter to determine a range of benefit entitlement and quantum disputes. At the start of the hearing, the parties narrowed the issues so that only a two-day arbitration hearing was required.

Part of this appeal pertains to the parties’ disagreement on what was agreed. The parties do agree they had resolved all entitlement issues including Mr. Kozumplik’s entitlement to post 104-week income replacement benefits (“IRB”) for the limited period August 29, 2006 to June 25, 2013. They further agree that Mr. Kozumplik’s base IRB, that is prior to any deduction for post-accident (in this case) self-employment income, was $273.68 per week. They also agree that the Arbitrator failed to address, or at least explicitly address, the specific IRB quantum issue regarding post-accident income from self-employment each party says was before the Arbitrator.

Aviva submits that the parties agreed that if the Arbitrator found that Mr. Kozumplik was found to be employed as defined in the Schedule and earning post-accident income during the period in question, then (1) the quantum of his post-accident IRBs was correctly calculated in the filed reports of LBC International Investigative Accounting Inc. (“LBC”); (2) Aviva had paid Mr. Kozumplik according to those calculations; and, therefore (3) no further IRBs were owed.

Mr. Kozumplik disputes that he agreed that if the Arbitrator found that he was employed, as defined, that no further IRBs were owed. He argues that such an alleged agreement flies in the face of the actual agreement, the testimony, exhibits, submissions and the Arbitrator’s decision. He maintains that the issue before the Arbitrator was whether he received income in respect of any employment for the period August 29, 2006 to June 25, 2013 and, if so, the appropriate deduction to be made. Mr. Kozumplik submits that his position was and remains that he was not employed. Accordingly, “anything reflected on his income tax returns does not and cannot constitute income received in respect of any employment.”

The arbitration hearing was not transcribed. The Arbitrator’s May 9, 2014 decision does not refer to any agreement by the parties. Rather, the Arbitrator made a finding that Mr. Kozumplik was entitled to post 104-week IRBs because his “level of ability to perform any work … is severely limited,” and, therefore, “meets the test of a complete inability to engage in any employment for which he is reasonably suited by education, training or experience.” The Arbitrator further held:

Mr. Kozumplik is entitled to an income replacement benefit at the rate of $273.68 per week from August 29, 2006 to June 25, 2013, less 80 per cent of his net income as set out in his income tax returns, plus the prescribed interest. [Emphasis added]

Rule 65.6 of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014) (the “Code”) provides that an “adjudicator may at any time clarify a decision or order that contains a misstatement, ambiguity or other similar error.”

Aviva’s June 10, 2014 e-mail sought clarification from the Arbitrator whether his decision was referring to all of Mr. Kozumplik’s income tax returns, including his personal and corporate tax returns and financial statements, and whether any further IRBs were owed. In the interim, Mr. Kozumplik delivered his June 6, 2014 Notice of Appeal.

In response to Aviva’s requested clarification, the Arbitrator wrote the parties June 23, 2014:

… it was my intention that Mr. Kozumplik was entitled to post-accident income, as an Income Replacement Benefit, for the period from August 29, 2006 to June 25, 2013. The rate of income replacement was to be $273.68 per week, less 80% of his net self-employment income, plus the prescribed interest for that period of time, as set out in his personal income tax returns. [Emphasis added]

Aviva filed its cross-appeal on June 27, 2014. My August 15, 2014 preliminary appeal order, in part, combined the two appeals to proceed on the same time lines and to be heard together. I will set out Mr. Kozumplik’s appeal and Aviva’s appeal in turn.

II. MR. KOZUMPLIK’S APPEAL

(a) Mr. Kozumplik’s submissions

Mr. Kozumplik argues that he is entitled to weekly IRBs from August 29, 2006 to June 25, 2013 of $273.68 without any deduction for post-accident employment income.

He states that subsection 2(5) of the Schedule provides that a person is employed “if, for salary, wages, other remuneration or profit, the person is engaged in employment including self-employment, or is the holder of an office.” Employment, Mr. Kozumplik submits, has a corresponding meaning.

The Arbitrator’s decision provides a summary of the evidence of Mr. and Mrs. Kozumplik but does not make any findings of fact. Included in that summary is that before his accident Mr. Kozumplik would acquire a property and, in Mr. Kozumplik’s view, he would undertake 95% of the renovation work “to bring the properties into a reasonably habitable condition.” As well, he performed all of the ongoing maintenance work for the properties he was renting to tenants, such as lawn mowing and minor repairs.

The Arbitrator further notes Mr. Kozumplik’s testimony that his wife handled the bookkeeping, incoming calls, and listing and showing properties. The couple split their income evenly on their income tax returns.

Mr. Kozumplik submits that the decision in Tran and TD Home and Auto Insurance Company, (FSCO A05-001715, January 16, 2008), suggests that if a claimant is found to suffer a complete inability to engage in any employment for which he is reasonably suited by education, training or experience under paragraph 5(2)(b) of the Schedule, anything reflected in his income tax returns cannot constitute income received in respect of any employment., Mr. Kozumplik further argues that, in any event, in the specifics of his case, what he did for his rental business in the post-accident period in question did not constitute employment.

Mr. Kozumplik submits that the Arbitrator never explicitly found he was engaged in employment or received income in respect of any employment from August 29, 2006 to June 25, 2013. The Arbitrator erred, he submits, in implicitly finding that the income declared in his income tax returns for that period was received in respect of employment, the latter being the prerequisite for 80% of such net income being deducted under subsection 6(2) of the Schedule from the base IRB.

Mr. Kozumplik cites the Ontario Court of Appeal in Heath v. Economical Mutual Insurance Company, 2009 ONCA 391, 95 O.R. (3d) 785, that “if the degree to which a claimant can perform an activity is sufficiently restricted, it cannot be said that he or she is truly ‘engaging in’ the activity.”

Mr. Kozumplik also relies on Mroue and Zurich Insurance Company, (OIC A97-000028, May 20, 1998), a case that addressed whether a claimant was employed at the time of the accident. Mr. Kozumplik cites from that decision that employment “entails a commitment to the workforce in exchange for which one’s services are compensated by money or some like advantage.” In that case, the situation was found to be not “an ad hoc, sporadic connection to the workplace, but rather one with a significant measure of predetermined regularity of what had to be accomplished, with discretion as to when and how the assigned duties might be carried out.”

Mr. Kozumplik further cites Garic and Markel Insurance Company of Canada, (FSCO P10-00003, May 9, 2012), where post-accident income was determined not solely based on the level of active participation of the claimant but also that of the replacement worker who had largely made up for the shortfall caused by Mrs. Garic’s reduced participation in the business. Mr. Kozumplik submits that he was not able to replace his labour and, unlike Garic, his business could not continue to operate anywhere close to how it operated before the accident.

Mr. Kozumplik also relies on James and Allstate Insurance Company of Canada, (OIC A‑015580, May 17, 1996), that while the claimant’s income tax returns were prima facie evidence of her post-accident income, “the inquiry into the amount of an insured person’s pre and post accident income should go beyond mere form, to examine the substance of each individual’s financial situation…the onus is on the Applicant to present reliable and cogent evidence to overcome the prima facie presumption.”

Mr. Kozumplik maintains that the “undisputed evidence is that he discontinued all maintenance and renovation work and undertook no sales of his properties.” The extent of his involvement in the family business was, as the Arbitrator states in his recitation of Mr. Kozumplik’s evidence, (a) visiting the rental properties when a tenant complained about a maintenance problem; (b) occasionally hiring someone to do maintenance on the properties; and (c) at times picking up maintenance supplies.

Mr. Kozumplik submits that there is no evidence in the record that establishes that his activities constituted the carrying on of business, employment, or self-employment; it is not something for which he would have been compensated in the real world. Rather, his “activities were ad hoc, sporadic, without a measure of pre-determined regularity of what had to be accomplished;” the little he was able to do does not amount to being engaged in employment as contemplated by the Schedule.

However, Mr. Kozumplik conceded in oral submissions that in the absence of a transcript or the consent of both parties, as an appellate officer, I am unable to make a finding that unlike the situation in Garic, Mr. Kozumplik was not able to replace his labour and that his business could not continue to operate anywhere close to how it operated before the accident. He acknowledges the danger in presuming that the Arbitrator’s recitation of Mr. and Mrs. Kozumplik’s evidence were in actuality the Arbitrator’s findings of fact.

(b) Aviva’s submissions

Aviva submits that the crux of Mr. Kozumplik’s appeal is his argument that if a claimant meets the post-104 week IRB test then he cannot possibly be considered employed within the meaning of the Schedule and cannot have post-accident income from employment.

It states that this is contrary to the presumption against tautology, as stated in Sullivan on the Construction of Statutes, Sixth Edition (LexisNexis Canada, 2014), “[i]t is presumed that the legislature avoids superfluous or meaningless words, that it does not pointlessly repeat itself or speak in vain.”

Aviva states that the post 104-week IRB entitlement test, qualified by the words “reasonably suited by education, training or experience,” is not to be confused with whether Mr. Kozumplik

was still employed post-accident and earning post-accident income from employment.

It submits that “it has been well established in the case law that claimants can meet the complete inability test for entitlement to post-104 IRBs, yet still be employed and earning post-accident income in a position for which they are not ‘reasonably suited.’” In this regard it cites, in part, Rumak and Personal Insurance Company of Canada, (FSCO A01-000065, November 5, 2003), that held that “based on the totality of the evidence in this case, the fact that Mr. Rumak has worked and continues to work 104 weeks post-accident does not disqualify him from meeting the post 104-week test.”

Aviva cites Wigle and Royal Insurance Company of Canada, (OIC A-012312, January 12, 1996) (upheld on appeal, OIC P96-000025, April 9, 1998), Iankilevitch and CGU Insurance Company of Canada, (FSCO P03-00013, August 31, 2004) and McLellan and Aviva Canada Inc., (FSCO P06-00041, October 4, 2007), for the proposition that benefits are to be determined on the realities of a claimant’s business activities.

Aviva argues that in this case Mr. Kozumplik agreed that the income he received from his business activities before the accident was income from employment. Had that income not been from employment, Mr. Kozumplik would not have qualified for IRBs in the first place.

Mr. Kozumplik also agreed, it submits, that the income he received from his business activities in the first 104 weeks following the accident was income from employment. Aviva asserts that it is only for the post-104 week period that Mr. Kozumplik challenges the nature of the income he received.

Aviva submits that Mr. Kozumplik’s evidence at arbitration was that there were no changes in the nature of the income he received between the pre and post 104-week periods. There was no change to the business structure, the corporate structure or how he reported his income to Revenue Canada. The only thing that changed was the disability test. Aviva concedes, however, that there is no transcript and that such findings are not to be found in the Arbitrator’s decision.

Aviva argues that the Arbitrator found as a fact, implicitly it concedes in oral submissions, that Mr. Kozumplik was earning post-accident employment income from August 29, 2006 to June 25, 2013. Therefore, it submits that the Arbitrator, again implicitly, made a finding of fact that Mr. Kozumplik had engaged in employment, a finding that cannot now be reviewed on appeal. Accordingly, Aviva submits it is entitled to deduct 80% of Mr. Kozumplik’s post-accident net self-employment income. Aviva thus asks that Mr. Kozumplik’s appeal be dismissed with costs.

III. AVIVA’S CROSS-APPEAL

(a) Aviva’s submissions

Aviva submits that the sole issue in dispute before the Arbitrator, the quantum of IRBs payable from August 29, 2006 to June 25, 2013, was further narrowed. As noted, it argues that if the Arbitrator found that Mr. Kozumplik was employed as defined in subsection 2(5) of the Schedule (which includes self-employment) and earning post-accident income from employment during the period in question, the parties agreed that the correct calculations regarding the quantum of IRBs payable for that period were set out in the LBC reports.

Aviva argues that the Arbitrator erred in law as follows:

(i) Exceeding his jurisdiction in deciding an issue not properly before him because of the agreement reached by the parties and communicated to the Arbitrator

Aviva argues that given the parties’ agreement at the start of the arbitration hearing, the Arbitrator erred in law by ordering Mr. Kozumplik’s post-accident net self-employment income to be determined based solely on his personal income tax returns.

Aviva submits that the Arbitrator erred in law in failing to give effect to the parties’ agreement and depriving Aviva of its right to procedural fairness and natural justice. It relies on Belair Insurance Company Inc. and Scarlett, (FSCO P13-00014, November 28, 2013), that overturned an arbitration decision because the arbitrator made “key findings based on materials or research that the parties had no opportunity to make submissions on.”

Aviva submits that at no time during the arbitration hearing was LBC’s calculation of IRBs in dispute. If the IRB calculation had been in dispute, it submits that it would have called its accounting expert to testify, asked different questions of Mr. and Mrs. Kozumplik, adduced different evidence and made different arguments.

Aviva concedes, however, that there is no evidence as to the agreement between the parties, nor does the Arbitrator reference any agreement either in his May 9, 2014 decision or in his June 23, 2014 clarification.

(ii) The Arbitrator misapprehended the law with respect to calculating income from self-employment in determining the quantum of the IRB payable

Aviva submits that the Arbitrator erred in determining that only self-employment income in Mr. Kozumplik’s personal tax returns be deducted, contrary to (1) subsection 62(1) of the Schedule that mandates that “a person’s income from self-employment shall be determined in the same manner as a person’s profit from the business in which the person was self-employed would be determined under the Income Tax Act;” and (2) that it is well established that benefits are to be determined on the realities of a claimant’s business activities.

Mr. Kozumplik agreed, Aviva submits, that his base IRB was correct, a calculation that gave him the benefit of income attributed to his wife. It submits that Mr. Kozumplik further agreed with Aviva’s IRB payments for the first two years post-accident up to August 28, 2006. It further submits that LBC acknowledged that Mr. Kozumplik had stopped working as a real estate agent due to the accident and that it calculated his post-accident income by including the cost of replacement labour he had to hire in his absence from his rental property business.

Aviva argues that in determining Mr. Kozumplik’s post-accident income from employment, the Arbitrator removed several sources of income. If the same approach had been applied in calculating Mr. Kozumplik’s base IRB, the result would have been only $141.54 per week.

Aviva submits that if the Arbitrator’s order stands, Mr. Kozumplik’s base IRB would be overstated and the post-accident deductions for income from self-employment understated.

This, Aviva argues, is contrary to Iankilevitch that IRBs are to be determined on the realities of a claimant’s business activities, the objective being “to ensure that the insured person receives an income replacement benefit that fairly and realistically reflects [his] actual income situation, avoiding both over and under-compensation.” It is further contrary to Bonitatibus and Wellington Insurance Company, (OIC A-000082, April 8, 1993), that an applicant cannot structure his financial affairs to artificially inflate the amount of his IRB.

Aviva submits that, regardless of whether one accepts its version of the parties’ agreement:

1. It can be inferred from the Arbitrator’s decision that he implicitly determined that Mr. Kozumplik was engaged in employment from August 29, 2006 to June 25, 2013. It can also be inferred that the Arbitrator found that Mr. Kozumplik was earning income from his employment during that period. These are findings of fact and are not appealable.²

2. It can also be inferred from the Arbitrator’s decision that he implicitly accepted the LBC reports because that was the only source of the $273.68 base IRB per week.

3. Therefore, in accordance with subsection 62(1) of the Schedule, the Arbitrator implicitly accepted the LBC approach that treated the income from the business (shown in the personal tax returns of both spouses and the corporate tax returns) as one economic unit to arrive at a weekly $273.68 IRB.

4. The only evidence of post-accident income was that provided by LBC. LBC’s methodology reflects the realities of Mr. Kozumplik’s business situation. Mr. Kozumplik did not file any evidence at arbitration supporting the calculation he now proposes.

5. Therefore, the LBC reports regarding post-accident income must also be accepted.

6. Accordingly, the Arbitrator erred in law in applying a different approach regarding post-accident income from self-employment by only deducting income from Mr. Kozumplik’s personal tax returns. This allowed Mr. Kozumplik to increase his pre-accident income by including his wife’s income while decreasing his post-accident income by inconsistently not including his wife’s income, leading to an over calculation of the IRB payable.

7. If the appellate officer is satisfied that the Arbitrator made findings of fact or inferences of fact, the Arbitrator’s order may be varied under subsection 283(5) of the Insurance Act, R.S.O. 1990 c. I.8, as follows:

Mr. Kozumplik has been paid an IRB at the rate of $273.68 per week from August 29, 2006 to June 25, 2013, less 80 per cent of his net post-accident income, as set out in the LBC International Accounting Reports tendered into evidence at arbitration. Mr. Kozumplik is not entitled to any further IRBs.”

Aviva, however, concedes in oral submissions that the Arbitrator never referenced the LBC reports in his decision. It submits that if I am not prepared to find that the post-accident deduction should be in accordance with the LBC reports, that it has paid according to those reports and that no further IRBs are owed, the matter has to go back to a new arbitration hearing.

(b) Mr. Kozumplik’s submissions

Mr. Kozumplik argues that the actual agreement between the parties was, following the approach

in Garic, that if the Arbitrator found as a fact that (a) Mr. Kozumplik was employed as defined in the Schedule for the period in question, and (b) that the combination of Mr. Kozumplik’s work and that of the workers hired to replace his services were equivalent to what existed pre-accident, then (c) the LCB reports accurately reflected his IRBs for the relevant period. Mr. Kozumplik, however, also conceded in oral submissions that there is no evidence of this agreement.

Mr. Kozumplik submits that at arbitration he had argued that he was not employed as defined in the Schedule or if he was employed, the value of that work was significantly less than his pre-accident services and the evidence was that replacement workers were only hired for emergencies.

Mr. Kozumplik argues that the fact that he qualified for post-104 IRBs (as the Arbitrator found) was only one factor in considering that he was not employed post-accident, not that it would

determine the issue alone, although that was suggested in Tran.

Mr. Kozumplik cites Allstate Insurance Company of Canada et al. and Saliba, (FSCO P01-00031, July 24, 2001), following The Conduct of an Appeal, 2^nd Edition (Toronto: Butterworths), that “it is the correctness of the judgment or order that is in issue in the appeal, and not the correctness of the reasons.”

He also cites Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003), that there is vital distinction between no evidence, properly characterized as an error of law and hence reviewable and a mere insufficiency of evidence, which is no more than an error of fact and not reviewable. In any event, he relies on Mangal v. William Osler Health Centre, 2014 ONCA 639, that where a trial judge decides to reject a theory proposed by counsel, his decision is entitled to deference, if well-grounded in the evidence.

Mr. Kozumplik submits that the Arbitrator found (implicitly, he concedes in oral submissions) as a fact that the nature of his self-employment and his involvement with the rental/renovation/sale business had changed dramatically as a consequence of the injuries suffered in the accident. He argues that the Arbitrator further implicitly found that it was no longer appropriate to apply the same approach in calculating employment income in the post-accident period as LBC had done in the pre-accident period as the nature of his self-employment.

Rather than adopt the LBC approach, Mr. Kozumplik submits that the Arbitrator found as a fact that the value of the services he performed from August 29, 2006 to June 25, 2013 was set out as self-employment income in his personal income tax returns and that was the only income from self-employment that should be deducted. Given the evidence, Mr. Kozumplik argues that the Arbitrator was not prepared to attribute back to him 50% of the net corporate income or half of his wife’s income, as had LBC.

Mr. Kozumplik argues that as in Iankilevitch, the Arbitrator ensured that he will receive an IRB that fairly and realistically reflects his actual income situation consistent with a reasonable interpretation of the Schedule, avoiding both over and under compensation. The focus under subsection 62(1) of the Schedule was “the content of [his] personal income tax returns and nothing more.” These findings of fact, he submits, are not open to appellate review.

However, Mr. Kozumplik conceded in oral submissions that the Arbitrator did not make any explicit findings of fact in this regard in his decision. Specifically, the Arbitrator did not make a finding whether Mr. Kozumplik was employed for the period in question, nor was there any analysis of the law.

IV. ANALYSIS

Subsection 283(1) of the Insurance Act, R.S.O. 1990, c. I.8, restricts appeals from the order of an arbitrator to questions of law.

Again, the paragraph 5(2)(b) post 104-week disability test under the Schedule is “complete inability to engage in any employment for which the insured person is reasonably suited by education, training or experience.” Subsection 6(2) of the Schedule provides that the insurer may deduct from the amount of the IRB payable 80% of the net income received by the insured person in respect of any employment subsequent to the accident.

Turning first to Mr. Kozumplik’s appeal, in Wigle, Arbitrator Seife set out a summary of the guidelines in interpreting the post 104-week test:

1. The question of suitable employment in every case is a question of fact: the work must be suitable for that applicant, viewed fairly and realistically in the context of his or her educational and employment background.

2. Suitable work is not limited to what the applicant was doing at the time of the accident, provided that it is not unrelated to his or her previous experience. However, work is not necessarily suitable because an applicant has done a stint of it in the past. If the job is substantially different in nature, status, or remuneration it may not be an appropriate alternative.

3. In deciding suitable employment, one must consider such factors as the nature and status of the work compared with what the applicant did before, the hours of work and level of remuneration, the applicant's employment experience and length of time spent in different jobs, his or her age, and his or her qualifications and technical training and know-how.

4. The primary focus is on an applicant's functional limitations; however, jobmarket considerations are relevant in determining suitable employment.

I disagree with the statement in Tran that “[e]ntitlement to post 104-week income replacement benefits requires that an insured person be essentially unable to function in a commercial setting.” Rather, the entitlement test can still be met if the commercial setting is one for which the insured person is not reasonably suited by education, training or experience.

Thus, as submitted by Aviva, in Horne and CIBC Insurance, (FSCO A00-000291, December 20, 2001), the post 104-week test was met where it was found that a car jockey job was significantly different in nature, status and remuneration to the claimant’s pre-accident job as a welder. Accordingly, the claimant was entitled to IRBs less 80% of the net income received by him in respect of post-accident employment. In Mack and Kingsway General Insurance Company, (FSCO A04-001040, March 28, 2007) the claimant, having met the post-104 week IRB test because of the substantial difference in remuneration between his pre- and post-accident jobs, was entitled to post 104-week IRBs less the deduction for post-accident income.

Thus, I do not agree with the suggestion that meeting the post 104-week IRB entitlement test, by itself, forecloses the possibility of the deduction under subsection 6(2) of the Schedule of any post-accident income received in respect of any employment.

However, the more fundamental issue in this case is the adequacy of the Arbitrator’s reasons.

In Murphy v. Murphy, 2013 ONSC 7015, Perell J., citing Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, stated that a failure to consider a required element of a legal test, is an error in law. He further stated:

It is an error in law for a judge or tribunal member to fail to provide an explanation of his or her decision that is sufficiently intelligible to permit appellate review: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, [2002] S.C.J. No. 30; Law Society of Upper Canada v. Neinstein (2010), 99 O.R. (3d) 1, [2010] O.J. No. 1046, 2010 ONCA 193, at para. 61.

The adequacy of reasons for decision is determined having regard to their functions, which are: to inform the parties of the decision; provide public accountability; and permit meaningful appeal or judicial review: R. v. M. (R.E.),

2008 SCC 51, [2008] 3 S.C.R. 3, [2008] S.C.J. No. 52, at para. 25. In R. v. M. (R.E.), at para. 17, the Supreme Court explained that the judge should tell the parties what he or she decided and they explain why but not necessarily how that decision was reached. The question about the adequacy of reasons is whether the reasons, viewed in light of the record and counsel’s submissions on the live issues presented by the case, explain why the decision was reached, by establishing a logical connection between the evidence and the law on the one hand, and the decision on the other: R. v. M. (R.E.), at para. 41. The reasons for decision must be sufficient to enable the parties and the reviewing court to determine whether there are grounds of appeal …

Reasons are adequate if they are responsive to the case’s live issues and the parties’ key arguments. Their sufficiency is measured not in the abstract, but as they respond to the substance of what was in issue: R. v. M. (R.E.), supra, at para. 34; R. v. Walker, 2008 SCC 34, [2008] 2 S.C.R. 245, [2008] S.C.J. No. 34, at para. 20. Adequate reasons will communicate the findings of fact upon which the court or tribunal based its decision, the court’s or tribunal’s conclusion, and the reasoning process that led to the conclusion. A reviewing court, however, does not have the power [page760] to intervene simply because it thinks the trial court did a poor job of expressing itself: R. v. Sheppard, supra, at para. 26. [Emphasis added]

The key live issue in this case, the legal pre-requisite to any deduction for post-accident income, was whether Mr. Kozumplik was employed, as defined, during the period in question, as it is only net income received in respect of any employment that is to be deducted.

The Arbitrator never explicitly made a finding of fact regarding the necessary pre-requisite element whether Mr. Kozumplik was employed during the time in question. If the Arbitrator made such an implicit finding of fact, he failed to establish “a logical connection between the evidence and the law on the one hand, and the [implicit] decision on the other” or explain why that decision was reached. Any implicit decision in that regard was insufficiently intelligible to permit appellate review. This constitutes an error of law.

Further, the Arbitrator’s decision was not responsive to Mr. Kozumplik’s key arguments that if one looked beyond the form of the financial arrangements between him and his wife from August 29, 2006 to June 25, 2013, the reality was that he was not engaged in employment as contemplated by subsection 2(5) of the Schedule. I find that the Arbitrator’s failure to address these arguments constitutes an error of law.

Turning to Aviva’s cross-appeal, both parties submit that an agreement was put before the Arbitrator, but disagree on the specifics of that agreement. The Arbitrator’s decision does not note any agreement between the parties. As there is no transcript of the arbitration, I am unable to determine what was agreed or, other than what is contained in the Arbitrator’s brief summary, what oral evidence was received.

Again, as set out regarding Mr. Kozumplik’s appeal, I am unable to find that the Arbitrator made a finding of fact that Mr. Kozumplik was employed during the period in question that is sufficiently intelligible to permit appellate review.

Nor am I persuaded that it is sufficiently intelligible that the Arbitrator accepted the approach taken by LBC. Firstly, the Arbitrator does not mention LBC or its reports in his decision.

Secondly, it is incongruous to find, for the purposes of the cross-appeal, that the Arbitrator accepted the LBC approach of treating the spouses as one economic unit when the essence of the cross-appeal is that the Arbitrator failed to take that approach.

Rather, I find that the Arbitrator’s decision is not responsive to Aviva’s key argument that the methodology applied by LBC should be adopted. The decision provides no explanation as to why a different approach should be taken in calculating Mr. Kozumplik’s IRB during the period in question from that taken in calculating his base IRB and the IRBs paid during the first two years post accident. If the Arbitrator implicitly rejected LBC’s approach, he gives no reasons in support of his alternate calculation, an approach both parties have appealed.

Nor does the decision address whether Aviva has paid Mr. Kozumplik IRBs in accordance with the LBC methodology and, if so, whether any further IRBs are owed.

These failures also constitute errors of law. Accordingly, both appeals are allowed and the Arbitrator’s May 9, 2014 decision is rescinded.

Both parties agree that it is not in the purview of an appellate officer to make findings of fact. That is the task of a first level adjudicator who has the opportunity to see and hear the witnesses and assess credibility. Accordingly, the matter is returned to arbitration for a new hearing.

V. EXPENSES

If the parties cannot agree on the legal expenses of these appeals, amending Rule 79.1 of the

Code, as allowed under Rule 81, the time for either party to request an appeal expense hearing is

extended, as requested to forty-five days from the date 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 submissions on such entitlement and/or quantum expense issues as are in dispute.

February 26, 2015

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Citing General Accident Assurance Company of Canada and Singh et al., 2000 CarswellOnt 8550 (Div. Ct.), and Kingsway General Insurance Company and Pereira, (FSCO P05-00031, December 20, 2006).