Arbitrator: Stephen M. Malach
Date: 98-03-23

IN THE MATTER OF THE ARBITRATION ACT, S.O. 1991 C. 17 AND IN THE MATTER OF AN ARBITRATION

BETWEEN:

MONNEX INSURANCE MANAGEMENT INC. Applicant
BELAIR COMPANIE D'ASSURANCES Respondent

Counsel:

Theodore P. Charney
Solicitor for the Applicant

Joanna Chadwick
Solicitor for the Respondent

AWARD

This matter comes before me pursuant to an Arbitration Agreement dated October 28, 1997, whereby the parties have agreed to submit to Arbitration and have agreed that the provisions of the Arbitration Act shall apply to this Arbitration.

The dispute between the Insurers arises out of a motor vehicle accident which occurred on April 8, 1995. Dhansukhbhai Patel died as a result of injuries sustained in that accident. At the time of the accident, he was a passenger in a vehicle insured by Belair.

The solicitors for the Applicants for benefits, initially wrote to Belair by letter dated May 30, 1995. Belair was put on notice of the accident and ws provided with various documents. The solicitor requested information as to the procedure for making application for death benefits and funeral expenses and other benefits to which the Applicants would be entitled.

Ultimately, the solicitor was advised to make Application to Security National Insurance Company, a company ultimately taken over by Monnex. ( will hereafter refer to the insurer of Tarun Patel as Monnex, rather than Security National).

The solicitor for the Applicants put Monnex on notice by letter dated July 6, 1995. Monnex was advised that the deceased Dhansukhbhai Patel was a dependant of Tarun Patel. Tarun Patel was insured by Monnex.

A meeting was held in August 1995 with the solicitor for the Applicants and representatives of both Belair and Monnex. There were discussions at that meeting as to a possible dependency of the deceased on Tarun Patel.

A completed Application for Accident Benefits was forwarded to Monnex. That application was dated August 18, 1995, and it was received by Monnex on August 23, 1995.

The main issue to be determined in this Arbitration is whether or not the deceased Dhansukhbhai Patel was dependent on Tarun Patel as at the date of the accident.

REGULATIONS 283/95

Regulation 283/95, made under The Insurance Act, came to force on May 27, 1995. Section of that Regulation provides as follows:

"The first insurer that receives a completed application for benefits
is responsible for paying benefits to an insured person pending the
resolution of any dispute as to which insurer is required to pay
benefits under Section 268 of the Act."

The attention of all insurance companies, carrying on business in the Province of Ontario, was drawn to the new Regulation in Bulletin A-5/95 issued by D. Blair Tully, Commissioner of Insurance. That Bulletin was dated May 29, 1995. The Bulletin was circulated to all insurers, so that the Bulletin would have reached all insurers by the early part of June, 1995.

There might well be an issue as to whether the Regulation is retroactive. Would it applt to an accident which occurred prior to the date of coming into force of the Regulation? Does it apply to this subject accident of April 8, 1995? Does it apply to a dispute occurred before May 27, 1995?

Prior to the coming into effect of the Regulation, there was a concern that a meritorious claim of an Applicant would be left unpaid while insurers battled over which insurer had to respond to the claim. The intention behind the Regulation is to ensure that the meritorious claim of an Applicant is paid and that the dispute between the insurers is resolved at a later date. The intention was to remove these types of disputes from the Arbitration Unit of the Ontario Insurance Commission and to have them arbitrated privately. In addition, arbitrarily, it was determined that the first insurer that received a completed application for benefits had to respond to and pay the claim, pending resolution of the dispute with the other insurer. If another insurer had to ultimately respond, the second insurer would simply repay the first insurer for the amount paid out.

ACTIONS OF THE INSURERS RELATIVE TO THIS CLAIM

Belair received the first correspondence from the solicitors for the Applicants and took the position that the solicitors should approach Monnex for payment of benefits.

Monnex took the position that Dhansukhbhai Patel was not a dependant of Tarun Patel and that Monnex did not have to respond to pay the benefits.

Representatives of both insurers met with the solicitors for the Applicants on August 18, 1995. Monnex advised the solicitors that the case would be reviewed and that they would be advised of the position of Monnex as soon as possible. Monnex then continued to deny responsibility to pay benefits.

By letter dated December 1, 1995, the solicitors for the Applicants referred Monnex to Regulation 283/95 and to Bulletin A-5/95. According to the records of Monnex, on or about February 9, 1996, the solicitors for the Applicants were advised that Monnex would be considering payment but would be disputing the matter with Belair. Records of Monnex dated February 14, 1996 referred to the obligation on the insurer which first receives an original application to pay and dispute.

In a letter February 13, 1996 from the adjuster for Belair to the solicitors for the Applicants and to Monnex, the adjuster for Belair also makes reference to a requirement that the first insurer receiving an Application pay benefits pending the resolution of a dispute.

It thus appers that February 1996, both insurers were treating Regulation 283/95 as applying to the subject case.

There is no doubt that Monnex was the first insurer to receive a completed Application for Benefits.

PAYMENTS ULTIMATELY MADE

Between February and early July 1996, Monnex requested and received further documents and considered the matter.

It was not until July 10, 1996 that Monnex ultimately made payments totalling %55,338.46 to the Applicants. That did not include any interest by reason of the delay in making payments.

On August 21, 1996, Monnex paid a further sum of $1,354.93 to the Applicants for benefits, again without any interest.

On August 21, 1996, Monnex paid interest of $12,193.05 to the Applicants.

ISSUES TO BE DETERMINED

1. The main issue to be determined is whether or not the deceased Dhansukhbhai Patel was a dependant of Tarun Patel at the date of the accident. If he was a dependant, it would be the obligation of Monnex to make all payments under the SABS in this case. There would then be no amount owing from Belair to Monnex in respect of benefits paid by Monnex. However, if it is determined that there was no dependency of the deceased Dhasukhbhai Patel on Tarun Patel, Belair would be obliged to repay Monnex benefits paid out in this case.
   
   
2. If there is no dependency and if Belair is obliged to reimburse Monnex, there is an issue as to whether belair should be called upon to pay the interest which Monnex ultimately paid to the Applicants, i.e. $12,193.05.
   
   
3. If Belair is required to reimburse Monnex, there is a claim for interest on the payments made by Monnex.
   
   
4. Finally, the entitlement to costs will have to be determined, pending upon the result in the case.

DEPENDENCY ISSUE

As set out above, the deceased Dhansukhbhai Patel was a passenger in a vehicle insured by Belair, at the time of the accident.

Belair alleged that, at the time of the accident, Dhansukhbhai Patel was a dependant of his cousin Tarun Patel. Tarun Patel was the named insured under a policy issued by Monnex, on the personal vehicle of Tarun Patel. If Dhansukhbhai Patel was a dependant of Tarun Patel, Monnex would be the insurer responsible to make all payments under the SABS, by reason of the priority rules set out in Section 268(2) of the Insurance Act, R.S.O. 1990,c.I.8, as amended .

The first issue for determination is whether or not Dhansukhbhai Patel was a dependant of Tarun Patel at the date of loss.

The evidence concerning the dependency issue was the evidence of Tarun Patel as well as various documents contained primarily in a Dependency Documentation Brief, marked as Exhibit 9 at the Hearing.

After hearing the oral evidence and after reviewing the documents marked as Exhibits and after hearing submissions by both counsel, I conclude that Dhansukbhai Patel was not a dependant of Tarun Patel at the time of the subject accident.

Both counsel referred to Decisions of Arbitratrs, Decisions on Appeal at the OIC and Court Decisions.

I accept the propositon that when considering the issue of dependency, one should not determine the position of a person solely "by a single 'snapshot*"
From the decision in Palmer v. Pilot Insurance Company (OIC File A-009068), the decision in Towsley v. Royal Insurance Company (OIC Files A-010196 and A-010717) and the decision in J.B. v. Liberty Mutual Insurance Company (OIC File A96-000008), I conclude that one must not focus in on a short period of time before an accident in considering dependency. One must look at the entire financial, employment and residential history of an alleged dependant over a realistic period of time.

In reaching my conclusion, I have also considered cases referred to by counsel for Belair. In the cases of M.J.T. v. Simcoe & Erie General Insurance Company and Pilot Insurance Company A-007417 and A-007645, Pagliarella v. DiBiase Brothers Inc., 71 O.R. (2d) 193 and in the case of Raffoul v. State Farm Mutual Automobile Insurance Company (OIC Files A-004476 and P-004476) consideration was given to cases in which parents provided support for children of varying ages and circumstances. In the M.J.T. case, the deceased had run away from home, had lived at a youth home and at other addressed and had also spent some time at the family home. He actally had lived at his parents* home irregularly. In June of 1991 he resumed more regular residence with this family. That was in the last three months prior to the accident. It was concluded that he had no mean to independently support himself and so the learned Arbitrator found that his parents were his main support because they provided food, lodging and spending money for him.

In the Pagliarella case, the alleged dependant had saved almost $45,000.00 by the time of the accident. Yet, Mr. Justice O*Brien concluded that she was a dependent relative. She had always lived at the home of her parents and have never made a financial contribution to the household finances. She paid no room or board. Her parents paid all expenses involved in running the household.

In the Raffoul case, the alleged dependant also had a large amount of assets. She had always lived with her mother. She paid nothing in respect of the household expenses and relied on her mother almost completely to provide necessities of life.

In all three of these cases, there was a special relationship between children and parents. That special relationship is not present in the subject case. That does not mean to say that there was not a relationship between Tarun patel and the deceased. They were cousins and had grown up together. Nonetheless, the extra-special bond between parents and a child was not present.
In arriving at my conclusion, I relied on the following supporting evidence:

1. The deceased earned $17,237.65 from emplyment at Parisian Knitting Mills, in the 1994 calendar year, notwithstanding that he was fired from that employment effective Septeber 25, 1994;
   
   
2. The deceased claimed and received UIC benefits following his dismissal from work until October 25, 1994, when he decided to travel to India to seek a bride. He volntarily stopped receiving UIC benefits then.
   
   
3. Prior to departing for India on or about October 25, 1994, the deceased made substantial withdrawls from various bank accounts. On October 11 and October 25, 1994 he withdrew a total of $3,925.00 from National Trust account number 02-19646. On October 20 and October 22, 1994, the deceased withdrew a total of $2,200.00 from National Trust account number 3-60459. Accordingly, within the month before his departure for India, the deceased had withdrawn a total of $6,125.00 from his bank accounts, likely to fund his trip to India.
   
   
4. The deceased had resided in Montreal prior to departing for India. It was the evidence of Tarun Patel hat he never assisted the deceased with gifts or loans prior to the deceased's departure for India.
   
   
5. According to the evidence of Tarun Patel, the deceased advised him prior to his departure for India, that on his return from India, he would live with Tarun Patel. There were no discussions then as to whether the deceased would pay rent or room and board, or how much would be paid, if such payments were to be made. Tarun Patel was going to allow his cousin to stay with him simply by reason of their relationship.
   
   
6. On or about March 26, 1995, the deceased returned from India. His bride was not with him. He began staying with Tarun Patel and no sum of money was paid by the deceased to Tarun Patel between March 26, 1995 and April 3rd or 4th, 1995 when the deceased left to travel to Montreal. It was on the return trip from Ontreal, on April 8, 1995 that the deceased suffered fatal injuries which resulted in his death on April 12,, 1995.
   
   
7. The Applicant applied for UIC benefits on March 28, 1995. Tarun Patel accompanied him to the UIC Office. The application for UIC benefits was ultimately processed by UICsuch that the payment of UIC benefits was ultimately made for the period commencing March 26, 1995, at the rate of $254.00 gross, i.e. $218.00 per week. It was not until after the accident that the UIC benefits were made available, once some additional enquiries were answered. There is no doubt that had the deceased not been killed, he would have ultimately received the UIC Benefits, backdated to March 26, 1995.
   
   
8. The Application for UIC Benefits set out that the deceased was available and ready to work.
   
   
9. When the deceased returned to Canada on or about March 26, 1995, he never received actual cash from Tarun Patel, by way of gift or loan.
   
   
10. There were never any actual discussions between Tarun Patel and the deceased as to payment for room and board. However, Tarun Patel made it clear in his evidence that once the deceased would have received UIC payments or earnings from employment, it was expected that he would pay for his room and board. Tarun Patel also made it clear that it was expected that when the deceased returned to Toronto from Ontreal, that he would get UIC benefits or would ultimately return to work.
    
    
11. Evidence was led as to the expenses of running the Tarun Patel household. The monthly expenses totalled roughly $1,800.00. The number of persons in the Tarun Patel household, including the deceased was seven or eight people depending upon whether or not the mother of Tarun Patel was in the household at the time. Assuming that seven persons resided in the household, the actual monthly expense, if one attributed an equal portion to each person in the household, approximated $255.91 monthly.
    
    
12. A review of the banking records submitted in evidence showed withdrawls by the deceased on April 4, 1995, of $410.67 from National Trust account 02-19646, withdrawl of $507.72 from National Trust account 05-12766 on April 4, 1995 withdrawl of $324.68 from National Trust account 3-60459 on April 4, 1995 and withdrawal of $1,130.12, from a Royal Bank account on April 6, 1995. Those withdrawls totalled $2,373.19. It is unknown what the deceased did with all of that money. The evidence of Tarun Patel was that there was approximately $1,000.00 in cash found in the belongings of the deceased post-accident.

Counsel for Belair referred me to the balance sheet approach of weighing sources of support and I have considered that approach in reaching my decision. That is the type of approach adopted in the case of Najem v. Axa Insurance Company and Economical Mutual Insurance Company (OIC file A-003115).

I accept the theory advanced by counsel for Monnex, that the time that the deceeased spen with Tarun Patel was an aberration. The earnings of the deceased in 1994, the amount of money available to him shortly before his departure for India, his application for UIC benefits and the fact that he would have received the same backdated to March 26, 1995, the fact of the money that he had on deposit in Montreal after his return from India and the fact that he had approximately $1,000.00 in cash belongings at the time of the accident, all support the theory advanced on behalf of Monnex that the Applicant was self-sufficient, notwithstanding that he was not actually employed after September 25, 1994. Furthermore, the actual time that he lived with his cousin was eight or nine days. Tarun Patel expected that the deceased would pay room and board once he received his UIC Benefits or obtained employment.

The value of the short period of room and board provided by Tarun Patel, on a monthly basis, totalled only $255.91. Reducing that to a period of eight to nine days would make the value of the support fal less than $100.00.

The deceased was able to support himself at the time of the accident.
I conclude that the deceased Dhansukhbhai Patel was not dependent on his cousin Tarun Patel at the time of the accident.

I conclude that Belair is responsible to repay Monnex for benefits paid to the Applicants.

IS MONNEX ENTITLED TO RECOVER FOR THE INTEREST PAID TO THE APPLICANTS

There is no need for me to determine whether Regulation 283/95 has retroactive effect as to apply to the dispute in this case. I do not have to determine that since both insurers ultimately took the position and accepted that the Regulation does apply to this case.

In considering the claim by Monnex for reimbursement of interest of $12,193.05, I considered the following:

1. The solicitors for the Applicants originally approached Belair for payment of benefits as at May 30, 1995. Belair ultimately referred the solicitors to present claims to Monnex.
   
   
2. A completed Application for Accident Benefits was intially provided to Monnex in or about August 1995. If one strictly applies Regulation 283/95, Monnex should have processed the claim at about that date and disupted the matter with Belair.
   
   
3. However, if Belair had sent an Application for completion to the solicitors for the Applicants when Belair initially was put on notice of the claim, Belair could have been the first insurer to receive a completed Application, in which case, Belair would have been obliged to make payment of benefits in early July 1995.
   
   
4. Monnex was referred to the Regulation by a letter dated December 1, 1995 from the solicitors for the Applicants. That letter was received by Monnex on December 6, 1995.
   
   
5. By February 1996, Monnex was accepting that Regulation 283/95 applied to this case. Notwithstanding that, the first payments by Monnex were not made until July 10, 1996.

I conclude that there was some uncertainty of both insurers in this case. Notwithstanding that Regulation 283/95 came into effect on May 27, 1995 and notwithstanding the Bulletin issued by the Commissioner on May 29, 1995, clearly, in this case, neither insurer considered the effect of the Regulation in the early months following this accident. Monnex was reminded about the Regulation when they received the letter, received December 6, 1995.

On the one hand, Belair was first put on notice of the claim and could have sent out an Application for completion to the solicitors for the Applicants. If that had been done, Belair would have made the payments and no interest would have been incurred by either insurer.

On the other hand, when Monnex received the letter on or about Deceber 6, 1995, Monnex could have made payment and approximately seven months of interest would have been saved.

Certainly by February 1996, Monnex was familiar with the effect of the Regulation and was accepting it. Notwithstanding that, there was a delay of approximately five months before payments were made.

In addition to the issue as to who should bear ultimate responsiility for the sum of $12,193.05, there is the matter as to whether interest should be awarded on that sum.

Taking all of the above into consideration, I conclude that Belair is obliged to reimburse Monnex in the sum of $6,000 in respect to the dispute over payment of the sum of $12,193.05. That allowance of $6,000 includes a portion of that sum of $12,193.05, inclusive of interest owing to date.

AMOUNTS TO BE PAID BY BELAIR TO MONNEX

1. Belair is to pay to Monnex the sum of $56,693.39 in respect of benefits paid by Monnex to the Applicants.
   
   
2. Belair is to pay to Monnex interest at the rate of five percent per annum, not componded, on the sum of $55,338.46 from July 10, 1996 to the date of payment and interest at the same rate on the sum of $1,354.93 from August 21, 1996 to the date of payment.
   
   
3. Belair is to pay to Monnex the sum of $6,000.00 in respect of the issue over the payment of $12,193.05. That sum of $6,000.00 is inclusive of interest due to date.

COSTS

At the Hearing, I advised the parties that I would award costs of $3,000.00 plus GST, plus assessable disbursements, unless either party advised me that they were disputing that quantum. I received no notice that either party was disputing that quantum. Accordingly, Belair shall pay to Monnex costs fixed at the sum of $3,000.00 plus GST, plus assessable disbursements. In addition, Belair shall pay the fees and expenses of the Arbitrator.

Counsel may speak to me if any difficulties arise in respect of the calculation of the amounts due under this Award.


DATED this 23rd day of March, 1998.