D.K.M. v. Motor Vehicle Accident Claims Fund, 2017 CanLII 82020

Licence Appeal Tribunal

Date: 2017-11-29

Tribunal File Number: 16-004520/AABS

Case Name: 16-004520 v Motor Vehicle Accident Claims Fund

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8, in relation to statutory accident benefits.

Between:

D.K.M.

Applicant

and

Motor Vehicle Accident Claims Fund

Respondent

HEARING DECISION

Adjudicator: Ian Maedel

Appearances:

For the Applicant: Vincent Bucci, Counsel

For the Respondent: Robert Kerkmann, Counsel

Heard in writing on: May 23, 2017

OVERVIEW

1The applicant was injured in an automobile accident on October 3, 2015 and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (''Schedule'').

2The applicant submitted an application to the Licence Appeal Tribunal – Automobile Accident Benefits Service (“Tribunal”) in respect of the amount of statutory accident benefits to which he is entitled.

ISSUE TO BE DECIDED

3The issue to be decided is whether the applicant is entitled to receive a rehabilitation benefit in the amount of $119,451.70 ($451,201.70 less amount approved) for home modifications and home devices, recommended by Accessible Solutions Inc., in a treatment plan dated October 5, 2015, denied by the respondent on June 28, 2016?

RESULT

4Based on the totality of the evidence before me, I find that the applicant is entitled to a partial recovery of the benefit claimed in the amount of $64,615.00 ($396,365.00 less the approved amount of $331,750.00). The quantum of the benefit does not include an amount apportioned for Harmonized Sales Tax (“H.S.T”).

5This quantum shall be payable at the time the expenses are incurred for the construction of a new single-floor residence.

FACTS

6The applicant was catastrophically injured in an automobile accident on October 3, 2014 when he was the sole occupant of a motor vehicle that left the road and struck a telephone pole. He was ejected from the motor vehicle and sustained a number of serious injuries, including a spinal cord injury rendering him a tetraplegic.

7As a result of the injuries sustained, the applicant is unable to independently sit, stand or walk and is completely dependent on others for all aspects of his physical care. The applicant is reliant upon a powered wheelchair for mobility.

8The applicant is a person of First Nations origin and is a status “Indian” as per the legal definition in section 2 the Indian Act.¹ He currently resides on the Six Nations of the Grand River Territory, near Brantford, Ontario.

9Broadly, section 16 of the Schedule requires the respondent to pay for all reasonable and necessary expenses incurred by the applicant including expenses for home modifications and home devices to accommodate his needs.

10Both the applicant and respondent agree that the purchase of a new home for the applicant is more reasonable than undertaking renovations to his current residence which is in a state of disrepair and structurally unsound.

11It is anticipated that a new, customized, single-level residence will be constructed upon the existing property.

ANALYSIS

Application of Section 16(4)(c) of the Schedule

12Section 16 of the Statutory Accident Benefits Schedule states:

Rehabilitation benefits

16. (1) Subject to section 18, rehabilitation benefits shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person in undertaking activities and measures described in subsection (3) that are reasonable and necessary for the purpose of reducing or eliminating the effects of any disability resulting from the impairment or to facilitate the person’s reintegration into his or her family, the rest of society and the labour market

(3) The activities and measures referred to in subsection (1) are,

(i) home modifications and home devices, including communications aids, to accommodate the needs of the insured person, or the purchase of a new home if it is more reasonable to purchase a new home to accommodate the needs of the insured person than to renovate his or her existing home;

13Section 16 of the Schedule clearly establishes that an insurer is responsible to pay for all reasonable and necessary expenses incurred by or on behalf of an insured party including home modifications and devices as laid out in section 16(3)(i).

14Section 16(3)(i) does contemplate the purchase of a new home in the event that it is more reasonable to do so rather than complete renovations of an existing home.

15However, section 16(3)(i) must be interpreted through the lens of section 16(4)(c) which states:

(4) Despite subsection (1), the insurer is not liable to pay rehabilitation benefits

(c) for the purchase of a new home in excess of the value of the renovations to the insured person’s existing home that would be required to accommodate the needs of the insured person;…

16Section 16(4)(c) places a reasonable limit upon the purchase of a new home, specifically limiting the quantum to the cost of renovations of the previous or existing home.

17This issue was canvassed by Justice Lalonde in Wynn v. Belair Direct,² where the plaintiff resided in rented premises which could not be renovated and sought an order that the insurer purchase a new home to accommodate her needs. Initially, the motions court judge acceded to the request and granted an order for the purchase of a new home.

18However, in granting leave to appeal, the Divisional Court found that the motions judge erred in interpreting section 15(8) of the Schedule, now section 16(4)(c). The Divisional Court stated that:

There is a statutory requirement that the insurer has to meet to determine what it will cost to renovate and that determination needs to be made, even though the rented premises of the plaintiff will not be renovated.³

19This interpretation was echoed in J.S. and Guarantee Company of North America⁴ when Financial Services Commission of Ontario (“FSCO”) Arbitrator Jeffrey Rogers noted:

The cost of renovations to the existing home sets the amount of the housing benefit. “There is a difference… between what the needs are and what is paid under the legislation, as the Court states. The insurer is only required to pay “what it will cost to renovate the existing home.”

20J.S. and Guarantee was upheld on appeal by Director’s Delegate David Evans, confirming that the price of a new home was limited to the cost of renovations.⁵

21The facts in both of the above cases are similar to the present case. As a result, I am bound by the decision of the Divisional Court in Wynn v. Belaire Direct and I am persuaded by the FSCO decision in J.S. and Guarantee. Section 16(4)(c) is operative in this matter and serves to cap the costs of a new home within the notional costs of the renovations to the existing dwelling.

22Both the applicant and respondent have made references to the Justin Vanden Berg-Rosentha and Motor Vehicle Accident Claims Fund (“Vanden Berg-Rosenth”) decision rendered by Arbitrator Jeffrey Rogers of FSCO.⁶ That decision is in regard to the definition of an ‘existing home’ within the meaning of section 15 and the cost of remedial renovations not ultimately found to be covered under the same section of the Schedule.

23The parties here have agreed that a new single-level home should be constructed. There is no dispute regarding remedial renovations to the existing dwelling, therefore, I fail to see the persuasive value of the Vanden Berg-Rosenth case as applicable to this matter.

Value of Renovations and the Reports Submitted

24I have reviewed all of the reports submitted by both parties. It is clear that the applicant will require a high level of care and assistance in reducing the effects of his disability.

25In regard to the proposed renovations, the applicant relies primarily on three reports:

i. Home Modifications Report, prepared by Accessible Solutions Inc. and authored by David Borthwick, Accessibility Design Consultant, dated June 18, 2015. This report was the basis for the original OCF-18 and proposes a total value of renovations at $456,617.00.

ii. Home Modifications Report #2, prepared by Accessible Solutions Inc. and authored by Mr. Borthwick, dated June 24, 2016. This report was prepared primarily to assess the quantum of the renovation costs and offered a revised valuation of renovations at $427,534.00.

iii. Occupational Therapy Insurer’s Examination-Home Accessibility Report Response prepared by Jane May, Occupational Therapist, dated August 4, 2016. Ms. May does not provide an estimate of total construction costs, but simply a reply to the Insurer’s Examination-Home Accessibility Report as completed by Starr Robinson, Occupational Therapist.

26The respondent relies primarily on four reports:

i. Occupational Therapy Insurer’s Examination prepared by Superior Independent Medical Assessment Centres (“SIMAC”) authored by Starr Robinson, Occupational Therapist, dated March 14, 2016. This report offered an estimated housing cost of $347,050.00.

ii. Insurer’s Pre-Accident Built Environment Architectural Evaluation authored by David Wallace, Vice President of Adapt-Able Design Group on behalf of SIMAC, dated March 14, 2016. The cost to modify the existing home is estimated as $334,500.00 in this report.

iii. Occupational Therapy Insurer’s Examination Addendum Report prepared by SIMAC and authored by Ms. Robinson, dated September 20, 2016. This report recommends that $344,250.00 be apportioned for revised construction and renovation costs.

iv. Insurer’s Pre-Accident Built Environmental Architectural Addendum Report prepared by Adapt-Able Design Group and authored by Mr. Wallace on behalf of SIMAC, dated September 20, 2016. The revised estimated budget for construction and renovation is $331,750.00.

27Following a careful review of all of the submissions provided by both of the parties, I find that the most compelling estimate which best addresses what is reasonable and necessary for the applicant’s rehabilitation needs is laid out in Home Modifications Report #2 authored by Mr. Borthwick.

28Mr. Borthwick’s second report was prepared directly in consideration of section 16(4)(c) of the Schedule, regarding the notional renovation costs of the existing dwelling. I find the pre-H.S.T. total of $383,865.00 the best estimation of what will likely be required to complete the construction of a new home. This quantum specifically addresses the applicant’s substantial personal care needs and falls within the ambit of section 16 of the Schedule.

29When I compare the content between Mr. Borthwick’s second report and the addendums relied upon by Ms. Robinson and Mr. Wallace, I note many similarities in costs, including construction contingencies, ceiling mounted track, septic system/well and consulting engineer fees.

30I am further persuaded by the evidence provided by Ms. May, the applicant’s treating Occupational Therapist for more than two and a half years. While I cannot totally discount the opinions of Ms. Robinson, who provided occupational therapy reports for the respondent, her observations were limited to a solitary meeting with the applicant over a three hour period in December 2015.

31Ms. Robinson makes a cost allowance for a generator to be installed in the new dwelling at a cost of $12,500.00.⁷ The respondent has submitted that the generator is a ‘device’ pursuant to section 16(3)(i), not a ‘renovation’ pursuant to section 16(4)(c) of the Schedule.

32I respectfully disagree. The generator is a reasonable and necessary renovation cost required to accommodate the substantial personal care needs of the applicant. The generator may be required to assist the applicant in exiting the residence in an emergency situation involving a power outage. Thus, I have added the cost of a generator to the final tally of renovation costs.

33The total of Mr. Bothwick’s estimated renovation costs, exclusive of H.S.T., are $383,865.00. When the cost of the generator is added in the amount of $12,500.00, the total renovation costs are $396,365.00.

Harmonized Sales Tax

34It has long been FSCO’s policy that H.S.T. is payable in addition to any rehabilitation benefit pursuant to section 16 of the Schedule. AABS has adopted the same policy with regard to the payment of H.S.T. of incurred rehabilitation benefits.⁸

35Here, the applicant is a status “Indian” as per the legal definition in section 2 of the Indian Act.

36As per section 87 of the Indian Act, the applicant is not responsible for the payment of H.S.T. provided he can establish proof of his status.

37The applicant’s existing dwelling and the proposed construction site are situated on lands of the Six Nations of the Grand River Territory, near Brantford, Ontario.

38Given the applicant’s submissions, I am not persuaded that the applicant will be liable to pay H.S.T. for the construction/renovation costs.

39The respondent is only liable to pay incurred construction costs. Once the applicant incurs the construction costs, they will be payable at that time pursuant to section 3(7)(e) of the Schedule. The respondent is obligated to pay any submitted invoice within 30 days of receipt per section 38(15) of the Schedule.

40The respondent is not an agent for the applicant, nor will it engage in a contractual relationship with any provider of goods and services on the applicant’s behalf. The respondent will pay invoices issued to the applicant. Given the applicant’s “Indian” status, he is not obligated to pay H.S.T. for the construction costs.

41In the event the applicant is charged H.S.T. as part of an incurred rehabilitation benefit, then the respondent would be liable to pay the applicable tax in addition to said benefit. However, I do not see it prudent to apportion any amount for H.S.T. to the notional costs of renovations/construction at this time.

CONCLUSION

42For the reasons outlined above, I find that:

i. Based on the totality of the evidence before me, the applicant is entitled to a partial recovery of the benefit claimed in the amount of $64,615.00 ($396,365.00 less the approved amount of $331,750.00). The quantum of the benefit does not include an amount apportioned for Harmonized Sales Tax (H.S.T).

ii. This quantum shall be payable at the time the expenses are incurred by the applicant for the construction of a new single-floor residence.

Footnotes

1. 1Indian Act, R.S.C. 1985, c. l-5.
2. 2Wynn v. Belair Direct [2003] O.J. No 3531.
3. 3Ibid at para. 66.
4. 4J.S. and Guarantee Company of North America (FSCO A09-000442, August 25, 2010) at pg. 6-7.
5. 5J.S. and Guarantee Company of North America (FSCO P10-00016, August 25, 2011).
6. 6Justin Vanden Berg-Rosentha and Motor Vehicle Accident Claim Fund (FSCO A07-000417, May 14, 2007).
7. 7Occupational Therapy Insurer’s Examination, Tab 4, Applicant materials, pages 31, 33.
8. 8FSCO Professional Services Guideline – Superintendent’s Guideline 03/14, September 2014.