"Dependant" determination fact based with focus on financial dependancy

Poutney and Economical Mutual Insurance – is injured party a DEPENDANT of the insured – identify intent of financial dependency in year prior to accident – fact specific determination

July 25, 2010, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Before: Rosemary Muzzi
Decision Date: June 7, 2010

The applicant, Mrs. Poutney, in this matter was the daughter of the insured. The insured died in a motorcycle accident on August 17, 2006. The applicant applied for statutory accident benefits from Economical Mutual Insurance as a dependant of the insured. The issue in the hearing was to determine if Mrs. Poutney was entitled to a death benefit pursuant to section 25 of the Schedule as a dependant of the insured.

The relevant portions of section 25 of the Schedule provide for the payment of death benefits to each of the insured person's dependants.

The Schedule states that a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person's spouse.

The parties agreed that in this case the year preceding the accident was the appropriate time period for determining whether the applicant's circumstances illustrated financial dependency. The accident occurred in August 2006, so the evidence was focused on the period from August 2005 to August 2006.

Decision makers have agreed that the issue of dependency is a question of fact. Each case is to be approached on its own facts and with the legislative intent in mind and proper consideration given to these factors: the amount and duration of the financial and other dependency, the financial or other needs of the applicant, and the ability to be self supporting.

Decision makers have further detailed these factors, deriving the nuances from the particular circumstances before them:

- The applicant must primarily derive his or her financial support from the person rather than from other sources;
- The dependence must be financial;
- Financial support includes the concept of money's worth or the reasonable value of goods and services provided and exchanged;
- The determination of the nature and degree of dependency is one of fact and requires an assessment of all of an applicant's particular circumstances at the time of the accident. However the applicant's position cannot be determined solely by a single snapshot of circumstances at that date;
- While the ability to be self supporting is a relevant criterion, nothing in the Schedule suggests that this must be measured with reference to living at a subsistence-level;
- What is the person's capacity to meet their own needs and can they meet 51% of their own needs with money already available to them apart from the other financial support;
- The overriding principle governing interpretation of the dependency provisions is that the benefits legislation is remedial and as such should be accorded a broad and liberal interpretation that best meets its objectives.

Mrs. Poutney argued that she was principally dependent on her father, the insured, in the year prior to his death. She had returned to full-time education with his blessing and support and he had undertaken to assist her in any way that he could and that included paying rent, paying off her Visa bill, helping with other expenses and promising to pay off the Ontario Student Assistance Program (OSAP) loan.

Economical argued that Mrs. Poutney had sufficient means to pay over 50% of her financial needs during the relevant time. While her father may have been providing her with financial support, because of the OSAP loan and the money she earned at a part-time job the applicant was not principally dependent on the insured. Economical asserted that the arbitrator should have assessed the applicant's ability to limit her expenses according to her means: it argued that the arbitrator had to consider that a student should be living like a student, not in the manner the applicant lived.

The credibility of portions of Mrs. Poutney’s account was challenged by Economical. The arbitrator found that her credibility was not affected by perceived inconsistencies between her oral testimony before the arbitrator and the transcript of a recorded interview with an insurance adjuster on August 23, 2006. The transcript of the recorded interview was unreliable and was therefore an inappropriate basis upon which to impugn Mrs. Poutney's credibility. The arbitrator came to this conclusion for several reasons. First, the arbitrator was unable to accurately compare Mrs. Poutney’s oral testimony to her answers to the interview questions because the arbitrator did not have a full transcript of the interview and could not make out the spoken answers of the interview from a recording given its poor quality. Second, the evidence indicated that the circumstances under which the interview occurred were stressful and difficult for Mrs. Poutney. She had just returned from being questioned in an OPP investigation concerning her father's motorcycle accident, the fatal accident having occurred just one week before. Third, the applicant testified that she was not completely aware of the purpose for which the interview was being conducted and its significance to her case and therefore may not have been as clear and as accurate in relating her circumstances and the arbitrator accepted this explanation.

The arbitrator found Mrs. Poutney's testimony credible and trustworthy because it made internal sense and coincided in the main with the oral evidence of the other lay witnesses and the documentary evidence before the arbitrator.

Mrs. Poutney's case rested in large part on proving the intention of her father to support her in her return to school and particularly during that year prior to his death. Economical questioned the credibility of that assertion arguing that the insured did not have the means to support his daughter, that she had been and still was capable of supporting herself, and that she lived, in that period, like someone who was not dependent on others for her support.

The arbitrator found that there were some fairly basic indications of a relationship of financial dependence between Mrs. Poutney and her father in the year prior to his accident. As a result, the applicant was entitled to benefits pursuant to the Schedule. The arbitrator’s conclusion rested on an assessment of Mrs. Poutney's expenses and income.

Mrs. Poutney’s expenses for the year in question totaled $32,732.75. Mrs. Poutney collected all of her financial records for the relevant period and created a schedule of expenses that also calculated the monthly contributions made by her father and herself. Mrs. Poutney testified that if the amounts to pay her expenses did not come directly out of her account, then she knew that her father had paid those particular expenses because she had no other source of income. Further, where she saw that large sums had been deposited she knew that those amounts came from her father for the same reason. The arbitrator accepted the applicant's schedule as a reliable tool for assessing her income and expenses and her additional oral testimony in this regard as credible.

Mrs. Poutney’s expenses in this period included items such as rent, tuition, cell and home phones, gas, personal hygiene, food, cable, clothing, car expenses, insurance and bank and Visa fees. Of particular note, Mrs. Poutney’s rent was $850 monthly for this entire period and Mrs. Poutney also had over $2,500 in clothing expenditures during this time.

Mrs. Poutney’s own income in the period from August 2005 to August 2006 totaled just over $10,000. At the time of the accident and in the year prior, beginning in September 2005, the applicant was working only part-time hours. She had a full-time job before deciding to return to school. She had believed that she could continue on full-time hours even after she commenced her college program. In fact, she was unable to maintain such a work schedule. The evidence showed that Mrs. Poutney earned in 2004 twice the money she earned in 2006. In the arbitrator’s view, the fact that Mrs. Poutney could only maintain part-time work hours indicated in part her inability to be self-supporting during this time.

Economical argued that the addition of the OSAP funds to Mrs. Poutney’s income brought her contribution to well above 50%. Further, the purchase of the motorcycle added to her otherwise profligate monthly expenditures showed her to be a person who lived well beyond her needs and her means. These considerations should have led to the conclusion that Mrs. Poutney was not principally dependent on anyone else for her support.

The arbitrator found that the OSAP loan was not to be viewed as income in the calculation of the applicant's contribution to her expenses because the arbitrator was persuaded that her father intended to pay off this loan as his contribution to his daughter's education. The credible evidence before the arbitrator was that the insured promised to pay back his daughter's OSAP loan and to do so prior to the interest period commencing. His support for his daughter's return to school and his intention to assist her financially were both corroborated by other oral testimony before the arbitrator.

The insured's former employer testified that the insured had most recently worked on and off from April 2005 to May 2006 as a truck driver hauling fuel for his transportation company and earned $16,400.10 in that time. He testified that the insured insisted on being paid on time because he had promised his daughter help with her college tuition, her rent and groceries. He also testified that in order to facilitate such support, the insured left his bank card with the employer so that deposits could be made into his account when he was out on the road. The applicant had a secondary card that allowed her access to her father's account.

The insured's former sister-in-law also testified that the insured was proud of his daughter's decision to return to school and intended to support her by whatever means he could.

Economical submitted that even if it was found that the insured promised to pay the OSAP loan, the finding with respect to dependency did not change. While the applicant received the money during the relevant time, the loan was not due to be paid during the year and therefore did not need to be paid. In the arbitrator’s view, Economical's suggested approach to this consideration was too rigidly mathematical and restrictive in the context of this case.

The arbitrator viewed the insurer's intention/promise to pay the OSAP loan as a significant commitment to Mrs. Poutney’s financial support that had an impact on the applicant's budget and financial activities throughout the year. It was found that the applicant lived like a person who expected a lot of money to be available to her despite the fact that she earned very little. Indeed, Mrs. Poutney admitted as much under oath. She agreed that she took advantage of her father's generosity, but believed herself entitled to it because he told her that he owed it to her and he never objected to her expenses. Mrs. Poutney testified that she never felt herself in a financial crunch because she had her father to help and if he had not given her money she would have made other choices. In fact, her father accompanied her to purchase the motorcycle and never raised the money as an issue. She spent money on clothes to fit in and look the part given that in her program she had to attend at Small Claims Court. She testified that she had issues with her feet so she purchased expensive shoes to accommodate those issues. Moreover, she did not look for a second job because her father was adamant that she concentrate on school.

There were also other contributions the insured made to his daughter's support that, in combination with those listed above, rendered her primarily financially dependent on her father during the relevant time.

The arbitrator found that the insured gave his daughter exclusive use of one of his other automobiles, a Grand Am, in 2004. She continued to have use of it during her college years. The insured paid the insurance.

Mrs. Poutney also testified that her father paid to have a tattoo removed from her hand given her desire to maintain a more professional appearance. She also testified that she has not yet had the removal job completed because it was an expensive procedure.

The particular circumstances of this case demonstrated that Mrs. Poutney was principally dependent on her father for financial support. The applicant could only pay one-third of her expenses on her own. The insured was responsible for most of her expenses which he paid with his own money or intended to pay by promising to reimburse her OSAP loan. As such, he substantially contributed to all of her expenses and his contribution allowed her to focus on her studies and otherwise prepare herself for her future career. His financial participation in her studies and career mirrored that of many other parents, many of whom have much greater means and need not resort to selling assets or taking loans.

Given that Mrs. Poutney was principally dependent on the insured for financial support, she was entitled to benefits as prescribed in section 25 of the Schedule.

About Paquette Travers & Deutschmann

Paquette Travers & Deutschmann serve South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann and Doug O’Toole focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us toll-free at 1-866-414-4878.

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