Appeals : Confirmed Referee Decisions : #46 - June 10, 2002

Supplementary Decision - August 22, 2003

D E C I S I O N

Claim ID: 1100082

1. On February 14, 2002, the Administrator denied the claimant's appeal with respect to the calculation of the amount of compensation representing loss of
income to the claimant.

2. The claimant requested that the Administrator's decision be reviewed by a referee.

3. The claimant requested an oral hearing by the referee.

4. The hearing took place before me on May 23, 2002, in Vancouver.

5. Neither party disputed the claimant's status as a primarily infected person under the 1986-1990 Hepatitis C Settlement Agreement.

6. On June 19, 2000, the claimant's application for compensation under the settlement agreement was approved. Compensation was approved with respect to
both Level 1 and Level 2.

7. The claimant objects to the calculation of the amount of compensation awarded to him for loss of income. The basis of his claim is as follows:

"This amount is not reflective of an owner of an up-scale jewelry owner, manager, director, working jeweler and master designer goldsmith with my experience and at the level of my employment." It is that issue that forms the basis of the dispute before me.

8. The essential facts are not in dispute between the parties and can be summarized as follows:

(a) In 1989, the claimant purchased an established jewelry business in Vancouver. Ownership of the business was divided between he and his wife.

(b) The claimant is a licensed goldsmith and watch repairer. He worked full time in this store approximately 80 - 90 hours per week designing jewelry, placing precious stones in jewelry pieces and repairing watches.

(c) The claimant's business employed goldsmith's, watchmaker's and sales clerks. The Claimant's wife worked in the business for some time, but in 1995 she returned to the nursing profession on a full time basis.

(d) In 1996, the grievor's wife left, and taking with her a number of the business records.

(e) In 1997, the business was forced to shut down due to major renovations in the building structure. The claimant had intended to reopen the store as soon as the renovations were completed in approximately 10 months time. However, the renovations extended over 2 years and by that time the claimant was too ill to continue to operate the business.

(f) The claimant has designated 1995, 1996 and 1997 as the designated period for determination of his pre-claimed net income under Section 4.02(2)(b) of the settlement agreement.

(g) The claim that is the subject of the application before me is for the post-claim year of 2000 and involves the claimant's loss of income for that year.

9. When the claim was initially made, the Administrator reviewed the supporting documentation. It appears there were a number of deficiencies and the documents that had been submitted did not support the amounts claimed. Apparently, the claimant was involved in a dispute with his accountant over unpaid fees for the accountant's services and he was refusing to release any documents until his fees were paid. The claimant was not able to provide these funds and the missing supporting documentation could not be provided to the Administrator.

10. Since the Administrator was unable to determine the income earned during the pre-claimed years an alternative approach was sought to provide an estimate of the income earned in those years.

11. The Administrator retained an independent accounting firm to provide a neutral assessment of the appropriate calculation. The accounting firm conducted an analysis which is contained in a report which was filed in evidence before me.

12. The accounting firm determined that the average wage rate for jewelers, watch repairers and related occupations according to figures provided by Human Resources Development Canada for the area that includes Vancouver, is $14.36 per hour. By using a forty hour work week as the basis of the calculation, multiplied by the hourly rate, on an annual basis, that would generate a gross pre-claimed income of $29,869. That sum is greater than the claimant had claimed as pre-claimed gross income for the years 1995, 1996 and 1997. The Administrator accepted the accounting firms' calculation, and applying the terms of the Settlement Agreement, particularly Article 7.03, it concluded that the loss of income for 2000 totaled $15,971.89.

13. At the hearing before me, the claimant's representative called a number of witnesses, including the claimant, and provided additional written information. The major point of contention was that the accountant's report was flawed in that it used a forty hour work week as the basis of the calculation. The witnesses, including the claimant, testified that in fact the owner of a jewelry business such as was operated by the claimant would routinely work a work week of eighty to ninety hours. In addition, the witnesses spoke of the way in which the value of the business would be increased as profits were put into inventory and described the various taxable benefits that were incurred through the operation of such a business.

14. It is not necessary to set out in detail the forceful submissions of the claimant's representative on his behalf. The claimant's primary position is that the average hourly wage rate of $14.36 is agreeable but that figure should be multiplied by a figure of eighty to ninety hours per week, not forty, on the assumption that it is reasonable to assume the owner would earn substantially more than a clerk in the same store.

15. Fund counsel called no witnesses, but provided helpful submissions. His position was that the claimant had not satisfied the onus to provide the necessary documentation to the Administrator in the first instance. Accordingly, he had received a gratuitous benefit as a consequence of the Administrator retaining an outside accounting firm whose findings exceeded what the Administrator would otherwise have determined to be his entitlement. Consequently, counsel submits the claimant's application must be denied.

16. The relevant portions of the Settlement Agreement are as follows:

2. Each Approved HCV Infected Person who is entitled to receive compensation for past, present or future loss of income caused by his or her infection with HCV will be paid subject to the provisions of Section 7.03, an amount each calendar year equal to 70% of his or her Annual Loss of Net Income for such year until he or she attains the age of 65 years determined in accordance with the following provisions:

a. "Annual Loss of Net Income" for a year means the excess of the Approved HCV Person's Pre-claim Net Income for such year over his or her Post-claim Net Income for such year.
b. "Pre-claim Net Income" for an Approved HCV Infected Person for a year means an amount determined as follows:

i. an amount equal to the average of the person's three highest consecutive years of Earned Income preceding the HCV Infected Person's entitlement to compensation under this Section 4.02 multiplied by the ratio that the Pension Index for the year bears to the Pension Index for the middle year of the foregoing three consecutive years, or, if the Approved HCV Infected Person or the Administrator demonstrates on a balance of probabilities that his or her Earned Income for such year would have been higher or lower than such average but for the HCV Infected Person's infection with HCV, such higher or lower amount, (the applicable amount being hereinafter referred to as the "Pre-claim Gross Income"), provided that the amount determined under this Section 4.02(2)(b)(i) will not exceed $75,000 multiplied by the ratio that the Pension Index for the year bears to the Pension Index for 1999, minus
ii. the Ordinary Deductions that would be payable by the Approved HCV Infected Person on the amount determined under Section 4.02(2)(b)(i) on the assumption that such amount was the Approved HCV Infected Person's only income for such year.

17: As I have noted, the claimant did not supply the necessary documentation to the Administrator because of the dispute with his accountant. Nor were any such documents filed before me. At the hearing, the claimant did not subpoena the records or seek the attendance of the accountant in the proceedings. If the Administrator had not sought out some alternative method to determine the loss of income, I would agree with fund counsel that the claim must be dismissed because of the failure of the claimant to provide the information required of him by the application of the section quoted above.

18. The Settlement Agreement is a court approved arrangement that can not be changed or amended by a referee. However, in determining matters such as this, the language of the agreement may be given a purposive interpretation in order to carry out the purpose and intent of the agreement. The Administrator's action in searching out an alternative basis of calculation was appropriate and consistent with the intention to provide fair compensation of claimants in accordance with their individual economic situations.

19. A referee should interfere with the results from such an independent analysis only in unusual circumstances. However, in making the calculation it did, the accountants used a forty hour work week as the basis for their determination. On the evidence before me, that would be a normal basis of calculation for everyone other than the owner of the business. The important point is that the claimant is the owner and while the methodology of making an income estimate by multiplying the average wage rate in such a business by the number of hours to be worked makes sense, it must be applied to him individually, not generically as a clerk. The accountants did not have the benefit of the evidence that was called before me, in particular the testimony of fellow jewelers and persons running businesses similar to that of the claimant. As a result, for the logic of the method of calculation to be applicable to the circumstances of the claimant, the number of weekly hours must be changed from forty hours per week to eighty hours per week.

20. Accordingly, I find that while the purpose of the exercise in which the Administrator was engaged was to fairly and accurately determine the claimant's loss of income, in this case for the year 2000, and that the Administrator acted properly and appropriately in carrying out that purpose by seeking an alternative method of calculation, it would be inequitable not to recalculate the accountant's figures by inserting the actual number of hours per week, as best that can be determined by the evidence, that the claimant would have worked had he not become ill and entitled to compensation. Simply put, since the purpose of the Settlement Agreement itself is to provide fair and adequate compensation to victims of this illness in accordance with the terms of the Agreement and since the Administrator made a decision based on information that was not in accordance with all the facts of the case, as disclosed by the evidence, I must conclude that the error in calculation should be corrected. Thus the Administrator's decision is varied to reflect the following calculation:
$14.36 x 80 hours per week x 52 weeks

21. In the result, for the reasons for I have given, the claim succeeds to the extent noted above.

Dated at Vancouver, British Columbia, this 10th day of June 2002.

John P. Sanderson, Q.C.
Referee

SUPPLEMENTARY DECISION

Claim ID: 1100082

On June 10, 2002, I issued an award with respect to the disposition of this claim in which I found as follows:

18. The Settlement Agreement is a court approved arrangement that can not be changed or amended by a referee. However, in determining matters such as this, the language of the agreement may be given a purposive interpretation in order to carry out the purpose and intent of the agreement. The Administrator's action in searching out an alternative basis of calculation was appropriate and consistent with the intention to provide fair compensation of claimants in accordance with their individual economic situations.

19. A referee should interfere with the results from such an independent analysis only in unusual circumstances. However, in making the calculation it did, the accountants used a forty hour work week as the basis for their determination. On the evidence before me, that would be a normal basis of calculation for everyone other than the owner of the business. The important point is that the claimant is the owner and while the methodology of making an income estimate by multiplying the average wage rate in such a business by the number of hours to be worked makes sense, it must be applied to him individually, not generically as a clerk. The accountants did not have the benefit of the evidence that was called before me, in particular the testimony of fellow jewelers and persons running businesses similar to that of the claimant. As a result, for the logic of the method of calculation to be applicable to the circumstances of the claimant, the number of weekly hours must be changed from forty hours per week to eighty hours per week.

20. Accordingly, I find that while the purpose of the exercise in which the Administrator was engaged was to fairly and accurately determine the claimant's loss of income, in this case for the year 2000, and that the Administrator acted properly and appropriately in carrying out that purpose by seeking an alternative method of calculation, it would be inequitable not to recalculate the accountant's figures by inserting the actual number of hours per week, as best that can be determined by the evidence, that the claimant would have worked had he not become ill and entitled to compensation. Simply put, since the purpose of the Settlement Agreement itself is to provide fair and adequate compensation to victims of this illness in accordance with the terms of the Agreement and since the Administrator made a decision based on information that was not in accordance with all the facts of the case, as disclosed by the evidence, I must conclude that the error in calculation should be corrected. Thus the Administrator's decision is varied to reflect the following calculation:

$14.36 x 80 hours per week x 52 weeks

21. In the result, for the reasons for I have given, the claim succeeds to the extent noted above.

The Claimant is seeking an Order from me with respect to the costs incurred by him in connection with these proceedings. More specifically, he seeks full reimbursement for all fees and disbursements paid to his representative who appeared at the hearing on his behalf, as counsel.

My jurisdiction is governed by the Tariff for reimbursement of expenses and fees, attached as Appendix "B" to the Order of the Court, dated June 8, 2001. The relevant portions of that Tariff read as follows:

As is evident from what appears above, a claim for reimbursement of expenses and fees is a matter within the discretion of the arbitrator and that discretion must be fairly and properly exercised. In this case, the claim has substantially succeeded. It is therefore appropriate to exercise my discretion and to find that the Claimant is entitled to the Order he seeks, subject of course to the application of the Tariff with respect to the individual items involved.

The Claimant's representative in these proceedings is not a lawyer and therefore paragraph 4 of the Tariff quoted above applies to the circumstances. Written submissions were provided and a full-day hearing took place. In my view, the Claimant's representative provided effective service to the Claimant in presenting his case. Accordingly I find the Claimant is entitled to reimbursement for the monies he has paid to his representative to the extent of $200 concerning the Tariff item covering written submissions. He is also entitled to the award of a further $400 for charges associated with the full-day oral hearing.

The Claimant seeks reimbursement for certain expenses incurred by him including costs of photocopying, long-distance telephone calls and the travel and accommodation expenses of a witness who gave testimony at the hearing on his behalf. Unfortunately, the Claimant was unable to provide receipts and documentation of these expenses. On the basis of the information before me, I am satisfied that payment should be made as follows: cost of photocopying, $10; long-distance telephone calls, $20; witness travel expenses (ferry) and accommodation, $250.

In the result, I direct that the Claimant be reimbursed for expenses and fees in accordance with the Tariff items referred to in this award, in the total amount of $880 for the reasons set out above.

Dated at Vancouver, British Columbia, this 22nd day of August, 2003.

John P. Sanderson, Q.C.
Referee