Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 132

FSCO A08-000827

BETWEEN:

ALEXANDER SITNIKOV

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Richard Feldman

Heard: July 13 and 30, 2009, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances: Jason Singer for Mr. Sitnikov

George R. Wray for Markel Insurance Company of Canada

Issues:

The Applicant, Alexander Sitnikov, was injured in a motor vehicle accident on May 12, 2005. He applied for and received statutory accident benefits from Markel Insurance Company of Canada (“Markel”), payable under the Schedule.¹ Disputes arose between the parties with respect to the Applicant’s entitlement to certain accident benefits and the parties were unable to resolve those disputes through mediation. Mr. Sitnikov applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. If Mr. Sitnikov is entitled to an income replacement benefit, what is the weekly amount of that benefit?

Result:

1. If Mr. Sitnikov is entitled to an income replacement benefit, the amount of that benefit is as follows:

a. nil for the period of May 19, 2005 to March 16, 2006; and

b. $37.17 per week from March 17, 2006 onwards.

EVIDENCE AND ANALYSIS:

Position of the Parties:

The dispute between the parties with respect to this preliminary issue is really over how to characterize the employment of the Applicant and how to calculate his IRBs.

The Applicant takes the position that, notwithstanding how he may have characterized his income in his income tax returns, he was in fact an employee and not self-employed at the time of the accident (or at any time during the four week period prior to the accident). He elected to base the Income Replacement Benefit (“IRB”) calculation on his income during the four weeks before the accident, which (according to the accountant retained by the Applicant to calculate his IRB) results in a weekly IRB of:

(a) $161.74 per week for the period of May 19, 2005 to March 10, 2006²; and

(b) $400.00 per week from March 11, 2006 onwards.³

The Insurer takes the position that the Applicant was self-employed or ought to be treated as such and makes the following alternate arguments:

1. The Applicant was in fact self-employed during at least part of the four-week period before the accident;

2. The Applicant chose to report his income to the Canada Revenue Agency as business income rather than income from employment and, as a result, he ought to be deemed to be self-employed for purposes of calculating his IRBs; or

3. Even if the Applicant was not self-employed at the time of the accident, his IRBs ought to be calculated taking into account the business deductions he claimed in his income tax returns (and which were accepted by the Canada Revenue Agency) in accordance with the principles enunciated in the case of Non-Marine Underwriters, Mbrs. of Lloyd’s and Dhir.⁴

In calculating the quantum of IRBs to which the Applicant may be entitled, the accountant retained by the Insurer relied upon the income tax returns filed by the Applicant and treated him as a self-employed individual. According to this accountant⁵, this results in a weekly IRB of:

(a) nil for the period of May 19, 2005 to March 16, 2006; and

(b) $37.17 per week from March 17, 2006 onwards.

Facts:

The Applicant is 53 years old. His ability to read and communicate in English is limited. This hearing was commenced on July 13, 2009 but had to be postponed until July 30, 2009 so that the Commission could arrange for a Russian interpreter. The only oral testimony I heard was that of the Applicant. The rest of the evidence was submitted by the parties in documentary form.

In the month before the accident, the Applicant was engaged in two different types of work: (1) as an unskilled labourer (in the period ending April 30, 2005); and (2) as a truck driver (from May 2-12, 2005).

Since 2001, Mr. Sitnikov has been getting work (off and on) as an unskilled labourer through an employment agency, Alliance Employment Services (“Alliance”). Virtually all of his work for Alliance has been at one factory (Talon) that is located close to his home. At this location, he typically packed material into containers, placed the containers on skids, moved the skids and placed the containers into storage. He was paid directly by Alliance for this work. He “punched” a time clock and was paid an hourly wage. Alliance issued pay stubs and T4 forms.⁶ Alliance deducted from the Applicant’s pay amounts for his share of Canada Pension Plan contributions and Employment Insurance premiums. While working for Alliance, Mr. Sitnikov had Workplace Safety Insurance Benefits coverage. Safety equipment was supplied to Mr. Sitnikov by his supervisor. He did not require any of his own equipment. His hours were set by his supervisor at the factory. His hourly pay was set by Alliance and it was not negotiated. He was told how, where and when to do the work by his supervisor (although Talon was able to accommodate Mr. Sitnikov’s request to work the night shift when he was taking a daytime program in order to learn how to drive a truck).

In or about 2003, Mr. Sitnikov obtained a licence to drive large trucks. Some companies require independent truck drivers to provide their services through a corporation so, in late 2003, Mr. Sitnikov incorporated 1599451 Ontario Inc. Through this company, he did work as a truck driver for a garbage removal company for approximately three months from about November 2003 until about January 2004. He was told that he would not be getting more work from this company because his English skills were not adequate. After January 2004, his corporation sat dormant. Mr. Sitnikov testified that, in late 2005, his daughter called the government in order to close the corporation and that, as far as he knows, it is “closed”.

From April 2004 through October or November 2004, Mr. Sitnikov worked as a truck driver for C&G Freight Systems Inc. (“C&G”). They paid him personally (i.e., not through his corporation). In October or November 2004, C&G was sold and the type of work it was doing changed so C&G no longer required Mr. Sitnikov’s services. Through C&G, Mr. Sitnikov was introduced to Mr. Riabchuk, who owned some trucks. Mr. Sitnikov ended up driving one of Mr. Riabchuk’s trucks in late 2004 or early 2005. By February 2005, Mr. Sitnikov was informed by Mr. Riabchuk that there was no more work for him. He did not do any work as a truck driver again until May 2005, when he was once again approached by Mr. Riabchuk to drive one of his trucks.

As before, Mr. Sitnikov would get a call from a dispatcher in the morning who would tell him where to get the truck, where to pick up the material to be transported and where to deliver the material. This work began on May 2, 2005. It was in the course of driving this truck for Mr. Riabchuk that the Applicant was involved in the accident on May 12, 2005.

Mr. Riabchuk did not wish to pay Mr. Sitnikov for the work he had done in May 2005. Mr. Sitnikov complained to the Ministry of Labour and an Employment Standards Officer investigated the matter. Mr. Sitnikov took the position that he was an employee who was owed compensation for the work he had done from May 2 through May 12, 2005. Mr. Riabchuk took the position that Mr. Sitnikov was not an employee. Rather, according to Mr. Riabchuk, they were business partners.

Ultimately, the Ministry of Labour found that Mr. Sitnikov was an employee of Mr. Riabchuk.⁷ In coming to this conclusion, the Employment Standards Officer considered the following facts:

• Mr. Riabchuk owned the truck;

• Mr. Riabchuk paid the insurance;

• Mr. Riabchuk registered the licence plates on the truck in his name;

• Mr. Riabchuk paid for the fuel;

• Mr. Riabchuk controlled to which transport company Mr. Sitnikov reported;

• Mr. Riabchuk was the one who contracted with that transport company (Uniworld Logistics Inc.) and who was paid by Uniworld;

• Mr. Riabchuk had the opportunity for profit or loss;

• Mr. Sitnikov had no risk of loss;

• Mr. Sitnikov provided labour and skill;

• Mr. Sitnikov worked for no other trucking companies at the time; and

• Mr. Sinikov drove the truck where and when he was directed by the Uniworld dispatcher.

According to Mr. Sitnikov, he was to be paid by Mr. Riabchuk on a “per trip” basis, which would be calculated weekly.

On the basis that Mr. Riabchuk controlled the work done by Mr. Sitnikov, supplied the tools and had the greater opportunity for profit and loss, the Employment Standards Officer determined that Mr. Sitnikov was in fact an employee working for Mr. Riabchuk and ordered Mr. Riabchuk to pay Mr. Sitnikov his wages for the period of May 2 to May 12, 2005 in the amount of $1,600.00 (plus 4% vacation pay).

Mr. Sitnikov reported all of his income to the Canada Revenue Agency (including the wages he eventually received from Mr. Riabchuk).

In 2003, Mr. Sitnikov’s gross annual income was approximately $15,000. In 2004, Mr. Sitnikov’s gross annual income was approximately $18,000. In both of those years, he treated all of his income as business income (rather than income from employment). As a result, he was able to “write-off” business expenses and thereby reduce his net business income to the point that he had to pay no income tax for either of those years.

On May 12, 2005, Mr. Sitnikov was involved in the accident that is the subject of this application for arbitration. In the four weeks prior to this accident, Mr. Sitnikov earned an income of $2,666.29 (gross) from a combination of his work for Alliance and for Mr. Riabchuk. Again, in his 2005 income tax return, Mr. Sitnikov treated virtually all of his income as business income and made deductions for business expenses.

Approximately ten days after the accident, Mr. Sitnikov returned to work with Alliance. He testified that he worked continuously for Alliance until mid-March 2006. According to Mr. Sitnikov, at that time he was “laid off” because he was not physically able to do the job. As a result of being laid off, he received Employment Insurance benefits.

The Law:

IRBs are calculated in accordance with strict provisions of the Schedule. IRBs are calculated differently for a person who was self-employed at any time during the four weeks before the accident.

Essentially, the Schedule recognizes two classes of persons who may be entitled to income replacement benefits: employees and self-employed persons. The methodology for calculating income replacement benefits is based on the determination of into which of these two categories the insured person falls.

Generally, for an employee, the income replacement benefit is 80% of the person’s net weekly income from employment.⁸ Net weekly income is calculated based upon the person’s gross income. For calculating the person’s gross income, the person can elect to use either the income they earned during the 4 weeks immediately preceding the accident or the 52 weeks preceding the accident.⁹ In the typical case, the method for calculating the IRB is as follows:

1. Take the gross income from employment for the designated period and calculate the gross annual income from employment in accordance with s. 8(3) of the Schedule;

2. Subtract from gross annual income from employment the following:

a. the annual premium payable by the person under the Employment Insurance Act (Canada) on the gross annual income from employment;

b. the annual contribution payable by the person under the Canada Pension Plan on the gross annual income from employment;

c. the income tax payable under the Income Tax Act (Canada) and the Income Tax Act (Ontario) on the gross annual income from employment;

3. Divide by 52 to get the net weekly income;

4. Multiply net weekly income by 80% to get the weekly IRB.

For self-employed persons, unless the parties (i.e., the insured and the insurer) have agreed in the insurance contract to fix the insured’s gross income from self-employment¹⁰, the income replacement benefit is based upon the person’s pre-accident gross income, which is determined in the same manner as the person’s profit from the business in which the person was self-employed.¹¹ The person can elect to use for this calculation the income they earned during either the 52 weeks before the accident or the last fiscal year completed before the accident for the business in which the person was self-employed, if the business completed a fiscal year before the accident.¹² To the IRB payable to the person based upon their pre-accident income can be added 80% of any losses from self-employment incurred as a result of the accident.¹³

In either case, the weekly IRB cannot exceed the maximum permissible amount¹⁴ or be less than the minimum¹⁵ permissible amount.

The threshold question is whether the insured person is employed or self-employed, with certain consequences flowing from that determination. A person cannot be treated as an employee simply because the four-week period provides a better measure of his or her income.¹⁶ On the other hand, if the person had a particularly profitable four weeks just before the accident, even though this may give an inflated view of the person’s income, as long as the person was not self-employed during that period, it is his or her right to elect to use that four-week period for the calculation of the IRB.

To assist in identifying self-employed individuals, the Commissioner has issued a guideline pursuant to s. 268.3 of the Insurance Act. It states that, for the purposes of the Schedule, an individual is considered to be self-employed if the business he or she derives his or her remuneration from is not incorporated under any law. For example, sole proprietorships are considered to be self-employment situations. “Business” is defined in the guideline as “an activity that is carried on for profit or with a reasonable expectation of profit, including a profession, a calling, a trade, a manufacture or undertaking of any kind, an adventure or concern in the nature of trade, or a service”.

According to the guideline, in a traditional self-employment situation, the individual:

• Is an owner of an unincorporated sole proprietorship or a partner in a partnership;

• Has an established location where business transactions take place;

• Participates in the everyday operations of the business;

• Determines own method and schedule for accomplishing tasks;

• Determines own hours;

• Negotiates the price(s) of product(s) or fee(s) for service(s) with the customer or client;

• Determines the annual income as his or her profit from the business according to the Income Tax Act (Canada) and Income Tax Act (Ontario);

• Is ineligible for regular Employment Insurance benefits;

• Contributes the employer and employee contributions to Canada Pension Plan (CPP) for his or her pension plan; and

• Collects and remits all taxes to different levels of government according to each respective tax legislation.

In the case of a sole proprietorship, a self-employed person typically has control over:

• The hiring and dismissal of employees;

• The wage level and hours of work of employees;

• The method by which employees accomplish work; and

• Executive decisions surrounding the business.

According to the guideline, in a contract of service situation, the individual:

• Has contract work with no long-term or permanent relationship to a specific purchaser;

• Is providing the actual service(s) which may be performed at one or more locations for one or more purchasers over the same period of time;

• Determines own method and schedule for accomplishing task;

• Determines own hours and may not necessarily work a set number of hours per period;

• Negotiates fees for services provided to the purchaser;

• Has a business-relationship with the purchaser(s) evidenced by a contract or agreement, either written or oral, express or implied, usually providing some sort of labour;

• Does not hire employees;

• Is ineligible for regular Employment Insurance benefits;

• Contributes the employer and employee contributions to CPP for his or her own pension plan; and

• Determines the annual income as his or her profit from the business according to the Income Tax Act (Canada) and Income Tax Act (Ontario).

One example given for a contract for service situation is an independent truck driver.

According to the common law, indicia of self-employment include (but are not limited to) the following:¹⁷

• Provision of the tools;

• Control over timing and method of completing the tasks;

• Negotiation of the remuneration; and

• Opportunity for profit or risk of loss.

For arbitrations under the Schedule in which characterization of employment is at issue, one more factor is considered to be extremely important: how the parties involved have, themselves, characterized the relationship. On this subject, Director’s Delegate Draper wrote as follows:¹⁸

The question is whether insurers should be looking behind the arrangements of the parties. For reasons set out above, it is my view that they should be slow to do so, as should arbitrators reviewing their decisions. The parties’ characterization should be disregarded only if it unreasonably distorts the insured person’s pre-accident income.

Finally, there is an appeal decision from the Financial Services Commission that seems to have carved out a third class of persons: employees who are legally entitled to deduct certain employment-related expenses (such as commissioned salespersons).¹⁹ In Dhir, it was found that although commissioned salespersons can be employees, unlike most employees, they are entitled to reduce their taxable income (and, as a result, their tax liability) by deducting from their gross income employment-related expenses (such as expenses related to communications, travel, clothing, meals, entertainment and, in some circumstances, costs associated with maintaining a home-office). The Director’s Delegate found that, to calculate the IRB for such persons, “gross annual income from employment” shall be interpreted as gross annual income from employment, after having deducted the employment-related expenses claimed by the person in their tax return; in this way, such a person is still characterized as an employee but the deductions he or she was permitted to make in his or her tax return are reflected in the IRB calculation. In the view of Director's Delegate McMahon, this results in an IRB that more closely resembled the person’s actual after-tax income. The Director’s Delegate wrote as follows (at pp. 14 – 15):

The drafter’s presumption [that no specific instructions were needed in relation to the calculation of an employee’s gross income from employment] failed to account for those commissioned salespersons who are required by the terms of their employment to incur employment expenses and who, in recognition of their unique situation, are entitled to deduct those expenses when they file their income tax returns. However, the drafter’s omission does not relieve me of the obligation to calculate the insured’s IRB in accordance with the intention of the legislation as a whole, and to interpret the existing words in a fashion that is consistent with that intention, and which provides a just result…

As has been stated repeatedly, the intention is to provide the insured person with a benefit that approximates after-tax income. If Mr. Dhir’s employment expenses are not accounted for in the calculation of his net weekly income, his IRB will grossly exceed his after-tax income. This would be inconsistent with the legislature’s intent. Further it would be unjust, and ought to be avoided if it can be done without distorting the wording of the SABS-94.

If gross income from employment for self-employed persons is treated as net of expenses, then gross income from employment for commissioned employees who are entitled to deduct employment expenses should be determined in the same fashion. That is to say, the employment expenses recognized by the Income Tax Acts should be deducted. Treating “gross income from employment” in this fashion is consistent with the overall intention of the scheme, and it is just in as much as it will produce an IRB that approximates the person’s after-tax income for all insured persons, irrespective of whether they are employed or self-employed.

Proceeding in this fashion requires the parties to determine gross income from employment for commissioned salespersons in the absence of any explicit rules as to what expenses are to be deducted. Given that a self-employed person’s gross income from employment is considered to be net of those employment expenses recognized by the Income Tax Acts, it does not distort the meaning of the words to apply the same rules to the class of commissioned salespersons who can also claim employment expenses.

There is no avoiding the comment that proceeding in the fashion I have suggested is filling a void left by the drafter’s omission to deal with a small but significant group of insured persons…

Analysis:

Was the Applicant self-employed at the time of the accident?

(a) Truck Driving

At the time of the accident, Mr. Sitnikov was driving a truck owned by Mr. Riabchuk, in fulfillment of a contract between Mr. Riabchuk and Uniworld. There was no written contract between Mr. Sitnikov and Mr. Riabchuk, so the exact arrangement between them remains uncertain. The Ministry of Labour investigated the matter and found that Mr. Sitnikov was an employee of Mr. Riabchuk at the time (for reasons provided earlier in this decision). Many of the criteria and facts considered by the Employment Standards Officer are identical to ones which I must consider. Thus, while the Ministry of Labour’s decision is not binding upon me, it is persuasive, especially in the absence of any evidence to the contrary. I agree with the Employment Standards Officer that Mr. Riabchuk exerted control over the work done by Mr. Sitnikov, that Mr. Riabchuk supplied the tools and covered all expenses related to the operation of the vehicle and that it was Mr. Riabchuk who had the greater opportunity for profit and the only risk of loss. I therefore accept that with respect to the work being done by the Applicant for Mr. Riabchuk from May 2 to May 12, 2005, Mr. Sitnikov was an employee and was not self-employed.

(b) Work for Alliance

In 2005, Mr. Sitnikov had been doing steady work for Alliance from (at least) February 6, 2005 through April 30, 2005.²⁰ Alliance placed Mr. Sitnikov in employment under the direction and control of Alliance’s client (Talon). Alliance issued pay stubs and paid Mr. Sitnikov for his work (after deducting CPP contributions and EI premiums but not income tax). Through 1604555 Ontario Inc. and 1653091 Ontario Inc., Alliance issued T4 forms to Mr. Sitnikov. In accordance with the directions of the Canada Revenue Agency, Alliance entered “Code 11” in box 29 of the T4 forms.²¹ After the accident, Mr. Sitnikov returned to his work with Alliance (on or about May 15, 2005) at the Talon factory and continued to work there until on or about March 16, 2006.

The following facts suggest that, with respect to his work for Alliance, Mr. Sitnikov was not self-employed:

• he had a long-term relationship with Alliance;

• he “punched” a time clock and was paid an hourly wage;

• that wage was not negotiated;

• Alliance issued pay stubs and T4 forms;

• Alliance deducted from the Applicant’s pay amounts for his share of Canada Pension Plan and Employment Insurance premiums;

• while working for Alliance, Mr. Sitnikov had Workplace Safety Insurance Benefits coverage;

• safety equipment was supplied to Mr. Sitnikov by his supervisor;

• Mr. Sitnikov did not require any of his own equipment;

• his hours were set by his supervisor at the factory;

• he was told how, where and when to do the work by his supervisor; and

• he had no risk of loss (or chance of profit beyond his hourly wage).

The main factor that supports a finding of self-employment is that “Code 11 employees” appear to be treated in a unique fashion under income tax legislation.

According to the April 16, 2008 report of Matson, Driscoll & Damico Ltd. (Exhibit 1, Tab 25, p. 3):

We were advised by the Canada Revenue Agency, that Code 11 refers to an individual who is an agency or placement worker. There are four situations where Code 11 is applicable. The insured falls into the category where the individual is considered self-employed for Income Tax purposes, but employed for C.P.P. and E.I. purposes. The individual is required to submit a Statement of Business Activities (T2124) which allows the individual to report their income as business income and deduct business related expenses to reduce their taxable income, however still have the applicable E.I. and C.P.P. deductions withheld.

According to the report of Alan Goldhar (Exhibit 1, Tab 26, p. 4):

This code [“code 11” in box 29 of the T4] indicates income from a placement agency and allows the recipient to be treated as an employee for CPP and EI deduction purposes, but also as a self employed person for tax purposes in that they would be allowed to claim business related expenses. This situation causes Mr. Sitnikov’s employment status to be ambiguous.

According to the March 19, 2009 report of Matson, Driscoll & Damico Ltd. (Exhibit 1, Tab 27, p. 2):

The ambiguity results because the same individual would still have the applicable E.I. and C.P.P. deductions withheld at source and as a result still be entitled to collect E.I. benefits, should it be necessary. Accordingly, it is a “win-win” situation as the insured is eligible to report expenses for Income Tax purposes in order to reduce any taxes owed, and is able to collect E.I. benefits as well, if they are unable to work.

Alan Goldhar suggests in his report that deductibility of expenses should not be determinative of whether a person is considered to be self-employed. He also questions the legitimacy of many of the deductions claimed by Mr. Sitnikov in his tax returns; the fact that the Applicant’s own expert is now questioning the legitimacy of the expenses the Applicant claimed and of which the Applicant has received a benefit, illustrates the difficulty with treating him as a regular employee.

There appears to be a trend (both in the provisions of the Schedule and in its interpretation) towards harmonizing an insured's IRB with his or her reported, pre-accident, after-tax employment income. For instance, according to Dhir, an employee who falls into a special class that is permitted to deduct employment-related expenses should be treated more like a self-employed person in the calculation of IRBs so that the amount of IRBs more accurately reflects the person’s pre-accident after-tax employment income. Subsequent to the Dhir decision, the Schedule was amended to include s. 64.1, which provides that IRBs shall be calculated without reference to any income that the person has failed to report for tax purposes.²² While s. 64.1 applies to all insured persons, it is usually only relevant to self-employed persons because self-employed persons are in a better position to manipulate their reported income and expenses.

While many indicia of employment exist in Mr. Sitnikov’s relationship with Alliance, he falls into a special category of employee (Code 11) that requires him to be treated as self-employed for tax purposes. His tax returns were prepared on the basis that his income was derived from business activities (i.e., from self-employment) and that characterization has been accepted by the Canada Revenue Agency. I find that, in this case, how the Applicant’s employment is treated for tax purposes ought to be given more weight than the other indicia combined. Consequently, I find that the Applicant was self-employed during the four-week period before the accident.

I therefore accept the approach adopted by the accountants retained by the Insurer and accept the figures contained in their report. Since they could not establish the Applicant’s income and expenses in the 52 weeks before the accident, they relied on his tax return and other financial information for 2004. I find this to have been appropriate. They considered the expenses that the Applicant actually deducted. I do not agree with the position taken by Mr. Goldhar that we should now be going through each business expense (i.e., deduction), disregarding those that the Applicant probably ought not to have claimed. I must decide this issue on the evidence currently available, which includes the tax returns of the Applicant as they have currently been filed and accepted by the Canada Revenue Agency.

I note that, even if I were wrong and the Applicant had not been self-employed at any time in the four weeks before the accident, his special status as a “Code 11” employee is analogous to the situation in Dhir²³ and I would simply instruct the parties in this case to perform an IRB calculation in accordance with that decision.²⁴

CONCLUSION:

If Mr. Sitnikov is entitled to an income replacement benefit, the amount of that benefit is as follows:

a. nil for the period of May 19, 2005 to March 16, 2006; and

b. $37.17 per week from March 17, 2006 onwards.

EXPENSES:

The parties made no submissions with respect to their expenses of this preliminary issue hearing and I am inclined to leave this issue to the arbitrator who presides over the issue of the expenses of the arbitration proceeding as a whole. Nevertheless, if the parties prefer that this issue be dealt with immediately and they are unable to resolve this issue on their own, either party may make an appointment before me to determine the matter in accordance with Rules 75 through 79 of the Dispute Resolution Practice Code.

October 1, 2009

Richard Feldman

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 132

FSCO A08-000827

BETWEEN:

ALEXANDER SITNIKOV

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is determined that:

1. If Mr. Sitnikov is entitled to an income replacement benefit, the amount of that benefit is as follows:

a. nil for the period of May 19, 2005 to March 16, 2006; and

b. $37.17 per week from March 17, 2006 onwards.

2. The decision on expenses is deferred.

October 1, 2009

Richard Feldman

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2$400.00 less $238.26 for post-accident income. See Exhibit 1, Tab 26.
3. 3See Exhibit 1, Tab 26.
4. 4(FSCO Appeal P98-00024, October 25, 2000). (“Dhir”)
5. 5See Exhibit 1, Tab 25.
6. 6Alliance often uses numbered corporations to issue these T4 forms so the name “Alliance” does not necessarily appear on the T4 forms that Mr. Sitnikov received.
7. 7See Exhibit 1, Tab 3.
8. 8Section 6(1) of the Schedule.
9. 9Section 8(1) of the Schedule.
10. 10Section 62(2) of the Schedule.
11. 11except that certain types of expenses, capitals gains, capital losses and losses deductible under section 111 of the Income Tax Act (Canada) are not to be taken into account: section 62(1) of the Schedule.
12. 12Section 8(2) of the Schedule.
13. 13Section 6(5) of the Schedule.
14. 14Usually $400 (s. 7(1) of the Schedule).
15. 15$185 after 104 weeks of disability (s. 6(1)(b) of the Schedule).
16. 16Allstate Insurance Company of Canada and Malik (FSCO Appeal P00-00007, July 17, 2000), at p. 9.
17. 17Healey and Pafco Insurance Company Limited (FSCO A00-000493, March 5, 2002) and Allstate Insurance Company of Canada and Malik (FSCO Appeal P00-00007, July 17, 2000).
18. 18Allstate Insurance Company of Canada and Malik (FSCO Appeal P00-00007, July 17, 2000) at p. 16.
19. 19Non-Marine Underwriters, Mbrs. of Lloyd’s and Dhir (FSCO Appeal P98-00024, October 25, 2000) (“Dhir”).
20. 20Exhibit 1, Tab 4.
21. 21Exhibit 1, Tab 29.
22. 22I acknowledge that there is no allegation that Mr. Sitnikov failed to report any of his income.
23. 23Which is a decision that is binding upon me, unlike the decision in Neill and Zurich Insurance Company (FSCO A97-001983, May 10, 1999). For an excellent analysis of why appeal decisions ought to be considered binding, see: Suppa and Motor Vehicle Accident Claims Fund (FSCO A08-002241, August 11, 2009).
24. 24According to the reasoning in Dhir, this exercise should result in figures very close (if not identical) to those already calculated by Matson, Driscoll & Damico Ltd. Of course, this only becomes an issue if I am wrong in finding that, for the purposes of calculating his IRB, the Applicant ought to be treated as self-employed with respect to his work with Alliance.