Thomas Anderson v. Western Assurance Company, 2016 ONFSCDRS 108

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2016 ONFSCDRS 108

FSCO A15-004566

BETWEEN:

THOMAS ANDERSON

Applicant

and

WESTERN ASSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Arbitrator Marcel D. Mongeon

Heard:

In person at Hamilton, Ontario on March 8, 2016

Appearances:

Mr. Harvey J. Katz for Mr. Thomas Anderson

Mr. James Greve for Western Assurance Company

Issues:

The Applicant’s mother, Elizabeth Anderson, was killed in a motor vehicle accident on August 12, 2014. The Applicant sought a death benefit from Western Assurance Company (“Western”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issue in this Hearing is:

Is the Applicant entitled to a death benefit under the Schedule?

Result:

The Applicant is not entitled to a death benefit.

EVIDENCE AND ANALYSIS:

The following facts are established by the evidence of the Applicant, his father and his brother. In addition, a joint document brief was filed with the agreement of the parties as to the authenticity and admissibility of the documents.

The Applicant’s mother was killed in an automobile accident on August 12, 2014.

All of the following facts relate to the Applicant at the time of the accident:

The Applicant resided with his mother and father. He was born in 1988 and was 26 years old.

The Applicant was employed and working full time in a call centre. His earnings were in excess of $1,000 per week on a gross basis.

The Applicant’s younger brother, in his early 20s, also lived in the family home.

The Applicant did not pay any expenses towards the operation of the family home. He was encouraged to use his income to pay down student loans and other debts and to save for the future possible purchase of a home for himself.

In the home, the Applicant was provided with his meals and other normal household living expenses such as toiletries and small living items such as new socks and underwear by his parents without expectation of any payment on the part of the Applicant.

The Applicant’s parents provided him an automobile and paid for the insurance payments to operate the vehicle.

No evidence was presented as to what the budget for the family home was.

In making a claim for the death benefit, the issue in question is whether or not the Applicant was a dependant of his mother. The definition is found in section 3(7)(b) of the Schedule:

a person is a dependant of an individual if the person is principally dependent for financial support or care on the individual or the individual’s spouse.

Was the Applicant ‘principally dependent’ for financial support on his mother or his parents at the time of the accident? The concluding words of section 3(7)(b) make it clear to me that dependence on either or both parents is the appropriate test in this case.

The Applicant has submitted the case of Singh and State Farm Mutual Automobile Insurance Company² which suggests that dependence is determined on financial support. Other forms of dependence are not to be considered.

Both parties have referred me to Esquimaux et al. v Pafco Insurance Company Limited,³ a decision of the Superior Court which makes it clear that dependence is assessed at the time of the accident.

The Insurer has submitted that the relevant test is often found in cases between Insurers such as priority disputes or loss transfers. The Insurer’s representative has noted that the issue of ‘dependence’ occurs far more frequently in such cases. As a result, the tests for financial dependence established in Court decisions and Arbitration decisions dealing with disputes between Insurers should be applicable to this case.

The Insurer cites Allstate Insurance Company v. ING Insurance⁴ in which the applicable test is succinctly summarized in paragraph 3, in part, as follows:

The case law recognizes that if a person has the means to provide for more than 50% of her own needs, then she cannot be dependent. Conversely, where one person provides more than 50% of the needs of another, then the other is financially dependent upon the provider.

The Insurer has also cited a private arbitral decision in Northbridge Personal Insurance Corporation and Belair Direct⁵ in which the Arbitrator established the test for whether or not a person was dependent using the following three steps (at page 10):

However, with the regulations as they presently stand we once again must launch a search for some basis for making a finding about principal dependency for financial support based on the facts of the case.

This requires the following considerations:

A determination of the cost of meeting Hillary W.’s needs.
Determination of an appropriate time window to examine the financial resources and needs.
Calculation of Hillary W’s income and consideration of whether or not the actual earnings of Hillary W. represent her resources or whether some adjustment should be made to take into account capacity beyond her actual earnings.

The cases also make it clear that the determination of ‘principally’ is a simple mathematical calculation. If a person can meet at least 50% of their needs themselves, they are not financially dependent.

I note that the test is if the person ‘can’ meet at least 50% of their needs; not that they do meet 50% of their needs.

In this case, we know that the Applicant earned more than $1,000 per week at the relevant time.

Applying the 50% formula, for the Applicant to succeed in an argument that he was financially dependent on either or both of his parents at the time of the death of his mother, the Applicant would have to show that his needs were in excess of twice his income or over $2,000 per week. No such evidence was presented.

As a result, I find that the Applicant was not principally financially dependent on his parents and, therefore, he is not entitled to the death benefit on a strict reading of the Schedule.

A final point that I must deal with.

The evidence suggested that the Applicant’s younger brother was paid the death benefit even though he received his own employment income. The Applicant’s representative argued that the Insurer should act consistently.

I will not make any determination if the Insurer should or should not have made the payment to the brother; I am not seized of that issue.

However, although the Schedule has regularly held to be a type of consumer protection legislation, protecting those who are entitled to the no-fault benefits that it provides, I am not aware of any provision that requires an Insurer to act identically across different claimants. The Applicant’s representative was unable to direct me to any such provision. I am also not aware of any general consumer law principle that an Insurer must treat all claimants in an identical fashion.

Accordingly, just because one brother may have been paid the benefit under what may have been similar circumstances is not a basis for me to allow the payment of the benefit.

EXPENSES:

If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

April 1, 2016

Marcel D. Mongeon Arbitrator

Date