Income Replacement Benefits (2009-10-11)

October 11, 2009, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Arbitrator: William J. Renahan

Decision Date: June 10, 2009
Hamidreza Daryoosh Adami was injured in a motor vehicle accident on February 22, 2002. He applied for statutory accident benefits from Wawanesa Mutual Insurance. The issues of the hearing were to determine if Mr. Adami was entitled to income replacement benefits from March 1, 2002 pursuant to section 4(3) of the Schedule and what the amount of any income replacement benefit may be. Also, the hearing was to determine if Mr. Adami was entitled to a special award pursuant to section 282(10) of the Insurance Act.
The arbitrator found that most of the documentary evidence provided to serve proof for Mr. Adami was produced to Wawanesa for the first time during the course of the hearing. Wawanesa’s counsel raised the issue of late production, however, he did not object to the introduction of the evidence. The arbitrator did deal with the late production of documentary evidence when he considered the special award issue and whether Wawanesa unreasonably withheld benefits.


Mr. Adami immigrated to Canada from Iran with his wife and young child on January 26, 2002. He was 38 years old. He was sponsored by his older brother under a "Family Business Application." Mr. Adami’s brother operated a transport company in Toronto that consisted of three to four trucks and three to six employees. At the time of the immigration application, Mr. Adami worked for a trucking transport company in Iran. He was qualified to drive tractor-trailers in Iran; however, most of his work was in management. The immigration application included a job offer from his brother to work for his company.
Mr. Adami claimed income replacement benefits under section 4(3) of the Schedule that requires that the insured be entitled to start work under a "legitimate contract of employment." Wawanesa's main argument was that the job offer was not "legitimate" because Mr. Adami did not have the qualifications to perform the work described in the contract of employment.
On February 22, 2002, less than a month after his arrival in Canada, Mr. Adami was a passenger in his brother's stationary vehicle when it was struck from behind three times. Initially, Mr. Adami thought his injuries were minor. On March 1, 2002, he started work for his brother. He gradually worked less and less.

Mr. Adami continued to complain of constant back pain and stopped work with his brother completely on July 16, 2002. Mr. Adami’s brother testified that it got to the point that Mr. Adami was no help to him and he decided to let him go. On October 4, 2002, seven months after the accident, a CT scan disclosed that Mr. Adami had a fracture of the L2 vertebra that had healed in such a way that the width of the spinal canal at that point was reduced by more than 50%. On August 12, 2004, Mr. Adami underwent an 8-hour operation in which the L1-L2 disc was removed and the L1-L2 vertebrae were fused with bone from the rib and screws.

Mr. Adami’s spinal canal space was no longer compromised, however, his back pain was the same. After the surgery, he took morphine in various forms daily, to deal with the pain.
Legitimate contract of employment:

Under section 4(3), an insured is eligible for income replacement benefits if he or she: (1) was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing, and (2) as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment he or she was entitled to start under the contract.
As part of the immigration application process, Mr. Adami’s brother submitted a written offer of employment to Mr. Adami.
Mr. Adami was not qualified to do the job because he could not perform management or customer services because his English was weak. As well, he was not licensed to drive a truck in Ontario. Other than basic maintenance of trucks, he could not perform the duties outlined in the written contract of employment.
The arbitrator agreed that to determine whether a contract is "legitimate" it is not necessary to construe it as a formal employment contract. Rather, in deciding whether the contract was "legitimate", the arbitrator had to determine what was in the reasonable contemplation of the parties when they entered this agreement.

Although he had experience in the trucking business, Mr. Adami would not have helped his brother much until his English improved and he obtained a license to drive trucks in Ontario. Mr. Adami had no one, other than his brother, in Canada when he came. It was reasonable to conclude that it was implicit in the agreement that the brothers would work together with the expectation that Mr. Adami's English would improve so that he could take over more duties over time and obtain a license to drive trucks.

The arbitrator then considered the evidence as to whether the contract was legitimate.

Mr. Adami did in fact work with his brother. In the first few weeks after his arrival, his brother helped Mr. Adami establish his family. On March 1, 2002, Mr. Adami started work. Hi brother drove him around to introduce him to his customers. As well, Mr. Adami did some minor maintenance on the trucks. He looked at the paperwork but with his limited English he was unable to help.

On April 1, 2002, his brother’s company issued a cheque to Mr. Adami for $1,280 on which his brother noted "03-01 → 03-15 80 hours." On July 16, 2002, his brother's company issued Mr. Adami a cheque for $3,500. Mr. Adami testified that one-third was for work, and the balance was a gift. He also testified that his brother said one-half was for work and one-half was a gift. His brother testified that he ended Mr. Adami's employment because it was not working out.
Mr. Adami produced his Type 2 driving license from Iran that allowed him to drive tractor-trailers in Iran. As well, he produced translations of Iranian documents that certified his experience as a "machine-mechanic technician" with a transportation company and that he had training in "interior electrical repair of heavy and semi-heavy trucks."

Within a week of arriving in Canada, Mr. Adami obtained a learner's driving license and he received his regular "G" licence a few weeks later. He received a "Z" endorsement to his driver's license on June 17, 2003, which allowed him to operate vehicles equipped with air brakes. He tried to obtain his "A" license twice, which would have allowed him to drive a tractor-trailer, but he failed because his English was inadequate.

The evidence is persuasive that the brothers intended that Mr. Adami learn English and obtain his licenses so that he could work in his brother's company. The brother found that the contract of employment was legitimate.

Mr. Adami testified that he has constant back pain and that he took morphine every day in the form of a patch and pills to deal with it. He walked with a cane and testified that he had not done much since the surgery. Dr. J.G., a psychologist, reported to Wawanesa in February 2007, that Mr. Adami was not able to work full-time. Wawanesa did not argue that Mr. Adami was employable. The arbitrator found that Mr. Adami could not work in his brother's company and at the time of the hearing, he suffered a complete inability to engage in any employment for which he was reasonably suited by education, training or experience.


Mr. Adami's family doctor in Iran wrote that Mr. Adami did not have a history of back problems. Mr. Adami testified that his condition got worse after the accident with therapy and that he stopped treatments after 15 sessions. Dr. B., an orthopaedic surgeon, reported to Wawanesa that it was difficult to understand how Mr. Adami could undergo spinal manipulation by a chiropractor in the presence of such a severe fracture and that it was doubtful that spinal manipulation would cause such a fracture. Wawanesa did not take the position that Mr. Adami's fracture pre-existed the motor vehicle accident or was caused by something other than the motor vehicle accident. On balance, the arbitrator found it likely that Mr. Adami's disability was caused by injuries suffered in the motor vehicle accident.

Amount of benefit:
Mr. Adami testified that after he stopped working for his brother, he delivered pizzas part-time. He also helped in the pizza store performing such tasks as grating cheese and cutting tomatoes. Although he was receiving welfare and had a duty to report his income, he did not declare his income from the pizza store to the welfare authorities or the income tax authorities. He described his hours as two, three to five-hour days per week, at $6 per hour plus tips. He testified that he worked 10 or 11 months. Based on the evidence that was heard, the arbitrator found it more likely that Mr. Adami worked at pizza delivery from July 16, 2002, when he stopped working for his brother, to August 12, 2004, when he underwent back surgery. This was a period of approximately 108 weeks. The arbitrator found that Mr. Adami minimized the amount of time he worked at delivering pizzas by about one-third.

Special Award:
The arbitrator was required to make a special award if he found that the insurer unreasonably withheld or delayed payments. Mr. Adami’s counsel argued that Wawanesa treated the claim as a scam from the beginning. The adjuster who handled the claim was present during the hearing, but no one called her to testify.

In view of the history of the claim, the initial claim for non-earner benefits and then caregiver benefits, the passage of 16 months before making a claim for income replacement benefits and the lack of information which explained Mr. Adami's immigration process and the employment contract in any reasonable detail, Wawanesa's request for information as set out in its letter of July 15, 2003 was reasonable.

All of this information was clearly identified, in the possession of Mr. Adami and could have been produced well before the hearing.

The arbitrator found that Wawanesa could not have determined that Mr. Adami was entitled to an income replacement benefit based on a contract of employment until they had the information they requested and that their request for that information was reasonable. Since it did not have that information until shortly before or until the hearing, they did not unreasonably withhold or delay payment of benefits.

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Disability Insurance, Fractures, Pain and Suffering, Spinal Cord Injury, Treatment, Truck Accidents

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Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit or call us toll-free at 1-866-414-4878.

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