CITATION: Wawanesa Insurance v. Uribe, 2010 ONSC 5904
DIVISIONAL COURT FILE NO.: 113/10
DATE: 20101025
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND NADEAU JJ.
BETWEEN:
WAWANESA MUTUAL INSURANCE COMPANY
Applicant
– and –
JOSE ESCOBAR URIBE and FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
Ian D. Kirby, for the Applicant
Nicolas Canizares, for the Respondent, Jose Escobar Uribe
Joe Nemet, for the Respondent, Financial Services Commission of Ontario
HEARD at Toronto: October 25, 2010
SACHS J. (orally)
[1] This is an application for judicial review of the appeal order of Director Delegate David Evans, (“the Director’s Delegate”) of the Financial Services Commission of Ontario (“FSCO”) dated February 5, 2010.
[2] The applicant requests an order setting aside the appeal order of the Director’s Delegate and reinstating the decision of the Arbitrator dated April 29, 2009.
[3] At issue in this application is the interpretation of s.64.1 of the Statutory Accident Benefits Schedule - Accidents On or After November 1, 1996 being Ontario Regulation 403/96, as amended. That section reads as follows:
64.1(1) If, under the Income Tax Act (Canada) or legislation of another jurisdiction that imposes a tax calculated by reference to income, a person is required to report the amount of his or her income, the person’s income before an accident that occurs after April 14, 2004 shall be determined for the purposes of this Regulation without reference to any income the person has failed to report contrary to that Act or legislation.
(2) Where the amount of a person’s income before an accident is determined for the purposes of this Regulation in accordance with subsection (1), the amount of the income may be adjusted to reflect any change in the amount of the person’s income reported or determined in accordance with the Income Tax Act (Canada) or legislation of another jurisdiction that imposes a tax calculated by reference to income.
[4] After Mr. Uribe was injured and had filed a claim for income replacement benefits, he filed an amended income tax return with Revenue Canada and reported higher income for the year in which the accident occurred. The income that was the subject of the amended return had not previously been reported to Revenue Canada. Consequently, his income replacement benefits had been calculated in accordance with the lower reported income pursuant to s.64.1(1).
[5] Mr. Uribe submitted, that, by virtue of s.64.1(2), he was entitled to have his income replacement benefits adjusted to reflect the higher income reported to Revenue Canada in his amended return. Wawanesa objected and the matter proceeded to arbitration. The Arbitrator found that s.64.1(2) did not permit an adjustment based on income that had not been reported to Revenue Canada when it should have initially been reported.
[6] The Director’s Delegate overturned the Arbitrator’s decision and found that Mr. Uribe’s income as reported in the amended return may be included in the calculation of his income replacement benefits.
[7] The core of the Director’s Delegate’s reasoning appears at pages 3 and 4 of his decision where he states as follows:
… the arbitrator narrowed the meaning of subsection (2) by referring only to a reassessment by the CCRA. He has not taken into account the alternative provided, namely “any change in the amount of the person’s income reported … in accordance with the Income Tax Act (Canada) ….” This alternative does provide a saving provision for Mr. Uribe, as “reported” can only refer to an action by the person.
Section 64.1 uses two important verbs, namely, “report” and “determine” and applies those to different players: the “person … required to report the amount of his or her income … under the Income Tax Act (Canada),” the insurer or arbitrator that determined pre-accident income “for the purposes of this Regulation” (the SABS), and the body (presumably the CCRA) that “determined [income] in accordance with the Income Tax Act (Canada).” Thus, income is reported by the person and is determined by others either for the purposes of the SABS or in accordance with the Act. Subsection (1) applies to a person who is required to report the amount of his or her income under the Act. If the person has failed to report any income contrary to the Act, that income is not included in the determination of the income. I see no reason why the term “reported” should have a different meaning in the saving provision set out in subsection (2).
Subsection (2) deals with a change in income reported by the person. I find that the arbitrator erred when he stated that “the application of the two subsections to the situation where the person does not report income to CCRA and subsequently files an amended return in which he reports the income and is reassessed is not clear.” For the reasons noted, subsection (2) deals exactly with that scenario. It follows that the arbitrator also erred when he stated that if “an applicant can file an amended return to remedy his non-disclosure of income, subsection (1) has no meaning.” It has a meaning, namely, that as long as income is not reported to the CCRA it will not be reflected in the IRB.
[8] Before us, Wawanesa made two submissions: (1) that the standard of review to be applied to the Director’s Delegate’s decision is one of correctness, not reasonableness; and, (2) that the Director’s Delegate’s decision means that s.64.1 has no purpose at all and is contrary to the clear language of the section and the clear purpose of the legislature in enacting the section.
Standard of Review
[9] Post Dunsmuir, this court has found that the standard of review to be applied to decisions of Director’s Delegates dealing with the interpretation of the Statutory Accident Benefits Schedule is one of reasonableness (See for example, Aviva Canada Inc. v. Murugappa, [2009] O.J. No 2770 at paras. 5 and 6).
[10] We therefore accept that the standard of review to be applied on this application is one of reasonableness.
Was the Director’s Delegate’s decision reasonable?
[11] In our view, the Director’s Delegate’s decision was both reasonable and correct.
[12] For the reasons articulated by the Director’s Delegate, his interpretation is consistent with the clear language of s.64.1(2) which includes the word “reported” as well as the word “determined”.
[13] It is also consistent with the purpose of the section viewed as a whole. While s.64.1(1) penalizes a claimant who fails to report income to Revenue Canada, subsection (2) is remedial and allows a claimant to “come clean” to Revenue Canada and have his or her income replacement benefits readjusted. If the claimant does not come clean, no such readjustment can occur.
[14] In our view, the Director’s Delegate’s interpretation of s.64.1 is not undermined, but is reinforced, by the published amendment to the Statute Accident Benefits Schedule referred to in the applicant’s factum.
[15] For these reasons, the application is dismissed.
SWINTON J.
[16] I have endorsed the Application Record, “This application is dismissed for oral reasons given by Sachs J. Costs to the respondent Mr. Uribe are fixed at $5,000, payable by the applicant. The Commission does not seek costs.”
SACHS J.
SWINTON J.
NADEAU J.
Date of Reasons for Judgment: October 25, 2010
Date of Release: October 29, 2010
CITATION: Wawanesa Insurance v. Uribe, 2010 ONSC 5904
DIVISIONAL COURT FILE NO.: 113/10
DATE: 20101025
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
SWINTON, SACHS AND NADEAU JJ.
BETWEEN:
WAWANESA MUTUAL INSURANCE COMPANY
Applicant
– and –
JOSE ESCOBAR URIBE and FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
ORAL REASONS FOR JUDGMENT
SACHS J.
Date of Reasons for Judgment: October 25, 2010
Date of Release: October 29, 2010