Construction of New Home Cheaper than Retrofitting Old Home for CAT Impaired - DKM V MVACF LAT 16-004520

January 19, 2018, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

DKM v Motor Vehicle Accident Claims Fund, LAT 16-004520 2017 CanLII 82020 (ON LAT)

Decision Date: November 29, 2017
Heard Before: Adjudicator Ian Maedel

ENTITLEMENT TO RENOVATION COSTS: Applicant CAT injured and it is undisputed that construction of a new home is less than renovating existing one;

DKM was injured in a car accident on October 3, 2015 and sought benefits pursuant to the SABs. DKM then applied to LAT.

Issue:

1. Is DKM 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 in a treatment plan dated October 5, 2015, denied by MVACF on June 28, 2016?

RESULT

1. DKM 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”). This shall be payable at the time the expenses are incurred for the construction of a new single-floor residence.

FACTS

DKM was catastrophically injured in an automobile accident on October 3, 2014 when he was the sole occupant of a car 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. DKM is unable to independently sit, stand or walk and is completely dependent on others for all aspects of his physical care. DKM is reliant upon a powered wheelchair for mobility. DKM is a person of First Nations origin and is a status “Indian” as per the legal definition in section 2 the Indian Act, and he resides on the Six Nations of the Grand River Territory, near Brantford, Ontario.

The Schedule requires MVACF to pay for all reasonable and necessary expenses incurred by DKM including expenses for home modifications and home devices to accommodate his needs. Both DKM and respondent agree that the purchase of a new home for DKM is more reasonable than undertaking renovations to his current residence which is in a state of disrepair and structurally unsound.

The Arbitrator reviewed the SABs, the evidence and the law, noting that section 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).  Section 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.  However, 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 benefitsn(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;…

Section 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.

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.

It 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. Here, DKM is a status “Indian” as per the legal definition in section 2 of the Indian Act. As per section 87 of the Indian Act, DKM is not responsible for the payment of H.S.T. provided he can establish proof of his status. Given DKM’s submissions, the Arbitrator was not persuaded that DKM will be liable to pay H.S.T. for the construction/renovation costs.

MVACF is only liable to pay incurred construction costs. Once DKM incurs the construction costs, they will be payable at that time pursuant to section 3(7)(e) of the Schedule. MVACF is obligated to pay any submitted invoice within 30 days of receipt per section 38(15) of the Schedule. MVACF is not an agent for DKM, nor will it engage in a contractual relationship with any provider of goods and services on DKM’s behalf. They will pay invoices issued to DKM. Given DKM’s “Indian” status, he is not obligated to pay H.S.T. for the construction costs.

In the event DKM is charged H.S.T. as part of an incurred rehabilitation benefit, then MVACF would be liable to pay the applicable tax in addition to said benefit.

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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 www.deutschmannlaw.com or call us at 1-519-742-7774.

It is important that you review your accident benefit file with one of our experienced personal injury / car accident lawyers to ensure that you obtain access to all your benefits which include, but are limited to, things like physiotherapy, income replacement benefits, vocational retraining and home modifications.