Aviva Insurance Canada v. WDW, 2018 CanLII 81989

Date: 2018-05-04

Tribunal File Number: 17-005894/AABS

Case Name: 17-005894 v WDW

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.

Between:

Aviva Insurance Canada

Applicant

and

WDW

Respondent

DECISION

ADJUDICATOR: Christopher A. Ferguson

APPEARANCES

Counsel for the Applicant: Geoffrey L. Keating

Counsel for the Respondent: Vincent Genova

HEARD in Writing on March 19, 2018

OVERVIEW

1WDW was involved in an automobile accident on October 11, 2013 (“the accident”), as a passenger in a rental vehicle insured by Aviva Canada Inc. (“Aviva”).

2The respondent applied for and received various benefits from Aviva Insurance pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule'').

3Aviva paid income replacement benefits (IRBs) to WDW in September 2016 for the period between October 2013 and September 2014. It then determined that WDW was not entitled to the amount it had paid him for IRBs for that period. It asserts that WDW was paid as the result of an error in calculating the quantum (i.e. amount) of his IRB entitlement.

4Aviva issued a notice to WDW dated July 5, 2017 informing him of the overpayment and requesting repayment. WDW responded by letter in January 2018 disputing Aviva’s recalculation of his IRB.

5Aviva has applied to the Tribunal to determine its entitlement – and WDW’s obligation to repay the disputed amount.

DISPUTED BENEFITS

6The issues to be decided by the Tribunal are:

1. Is the Aviva entitled to a repayment from WDW of $6,059.23 for IRBs, which Aviva states was paid as a result of an error?

2. Is WDW entitled to IRBs for a period of time and in a quantum to be determined by the time of the hearing?

3. Is Aviva liable to pay WDW’s costs in this proceeding?

FINDINGS

7I find that there was not an overpayment of IRBs and that WDW is not liable to repay Aviva $6,059.23 that it paid in benefits to him.

8I find that WDW is entitled to IRBs in the amount of $400.00 weekly from October 18, 2013 to date.

REASONS

9Section 52 of the Schedule prescribes that a claimant is liable to repay any benefit paid to him or her as the result of an error.

10Section 52(3) requires the insurer to notify the claimant, within twelve months of the overpayment, that it requires him or her to repay benefits.

WDW’s entitlement to IRBs

11The error and overpayment claimed by Aviva do not relate to the applicant’s medical eligibility for IRBs. The case before me is strictly financial.

12WDW had eligible pre-accident income including earnings from:

1. personal income

2. self-employment income from his numbered company (“ONCorp 9”)

3. income from his farm company (“SOFarms”)

13The parties' evidence and argument is entirely centred on questions of how to interpret the Schedule. No case law or jurisprudence was submitted in argument to assist me in deciding how to interpret and apply the relevant sections.

Calculating IRBs

14Section 4 of the Schedule sets out how to determine an insured person’s pre-accident gross employment income for the purpose of calculating IRBs. It sets out options, from which the insured can choose, for determining pre-accident gross annual income.

15IRBs cover self-employment income.

16Section 4(2)3 of the Schedule prescribes that a person who was self-employed for at least a year before the accident may designate the amount of his/her gross employment income during the last fiscal year (“FY”) of the business that ended on or before the accident as his “gross annual employment income”.

17Section 7 of the Schedule prescribes how to calculate the amount of weekly IRB. In effect, an eligible person is paid 70% of his/her pre-employment income, minus 70% of any gross employment income earned after the accident.

How should the amount of WDW’s IRBs be calculated?

18The dispute arises solely from disagreement on how to calculate the amount of IRBs to which WDW is entitled.

19This matter turns on whether or not the WDW’s pre-accident gross employment income was calculated correctly. Aviva asserts that it was not.

20The parties do not dispute the amounts earned by WDW during the year prior to the accident or during his attempts to return to work after the accident. Because the dollar amounts submitted by both sides as WDW's pre- and post-accident earnings and losses are uncontested, I accept them as accurate.

21Aviva submits that the initial IRB calculation was performed by its consultant, Matson Driscoll & Damico Ltd., Forensic Accountants (“MDD”), in a report dated September 15, 2016. That report put WDW’s eligible post-accident base weekly income at $101.47 – 70% of weekly income of $144.95 earned by WDW from October 11, 2013 to September 30, 2014. Based on that report, it proceeded to pay WDW $6,059.23 in IRBs for the period of October 11, 2013 to September 30, 2014. Aviva made the payment in September 2016.

22Aviva submits that it misinterpreted or misapplied MDD’s report and used $101.47 as the quantum for weekly IRBs payable to WDW. In fact, because it was post- and not pre-accident income, Aviva argues that $101.47 was in fact the amount that it was entitled to deduct from any IRBs owing to WDW.

23Aviva wrote to WDW on July 5, 2017², informing him of its error and requesting repayment. WDW then obtained a report from his consultant, RSM Canada LLP, forensic accountants (“RSM”) dated January 9, 2018. This report states WDW’s IRB entitlement is $400.00 per week.

24To support its case for repayment, Aviva, with support from MDD, including a second report dated February 2, 2018 (“the February Report”), argues that the RSM report is flawed because:

i. It calculates WDW’s 2012 farming income as “gross employment income”.

ii. It is in fact “self-employment income” as defined by the Schedule s.4(1)³

iii. It failed to note losses from ONCorp 9 for the last FY pre-dating the accident, totalling $50,054.58, which should be deducted from calculations of WDW’s pre-accident income.

iv. As a result of the above errors, RSM’s assumption of gross employment earnings of $12,747.02 for the last FY prior to the accident is incorrect.

v. It failed to set out the information reviewed and relied on it to form its conclusion.

25Aviva argues that the amount of IRB payable to WDW from October 11, 2013 to September 30, 2014 is actually $0.00 based on the following calculation:

1. weekly base income = $37,096.50 [i.e. 70% of net farming income]

minus/less $34,038.21 [i.e. 70% of ONCorp 9 losses]

= $3,058.29 ÷ 52 weeks = $58.80/week base income

2. WDW had weekly earned income of $101.47 during the period in dispute.

3. $58.80/week base income

• $101.47/week earned income

= -$42.67

4. Therefore, the amount of IRBs payable is zero.

26In response to Aviva’s submissions, WDW argues as follows:

i. The Schedule s.4(2)3 allows a self-employed person such as WDW to designate the amount of his gross employment income during the last FY of the business that ended on or before the accident as his “gross annual employment income”.

ii. WDW’s last pre-accident FY was 2012. Therefore, IRBs should be calculated using the self-employment income of $52,995 earned during 2012, reported in his 2012 income tax return and filed prior to the accident.

iii. Corporate losses are immaterial in cases where personal income is reported and taxed. They are not to be deducted.

27I find that WDW is entitled to the IRB amounts he claims for the following reasons:

i. Aviva provides me with no authority for its contention that it can deduct ONCorp 9’s losses – which are corporate losses -- from WDW’s personal income. No such authority is expressly provided in the Schedule.

ii. I agree with WDW’s plain reading of s.4(2)3 of the Schedule: WDW as a self-employed person may designate his gross employment income from 2012 (the last FY of the business that ended before the accident) as his “gross annual employment income”. That amount – uncontested – is $52,995.

iii. I find no basis for Aviva’s assertion that WDW cannot use s.4(2)3 of the Schedule because his income from self-employment is somehow excluded from the definition of “gross employment income” in s.4(1) of the Schedule, for the purposes of applying s.4(2)1. Aviva provides none.

iv. I find that the appropriate formula for determining WDW’s IRB entitlement is:

1. weekly base income = $37,096.50 [i.e. 70% of net farming income]

÷ 52 weeks

= $713.39/week

2. WDW had weekly earned income of $101.47 during the period in dispute:

$713.39 - $101.47 = $611.92/week

28$400.00 is the prescribed maximum weekly IRB payable under s.7(1) and 7(2)i of the Schedule for a person during the first 104 weeks of disability. The amount payable to WDW is $400.00/week, given that the amount I calculated exceeds the prescribed maximum.

29As the result of the foregoing findings, I find that Aviva is not entitled to repayment of any of the IRBs it paid out to WDW.

Period of Entitlement to IRBs

30Issues of medical eligibility for entitlement, as prescribed by ss.5 and 6 of the Schedule are not before me.

31At paragraph 20 of his Response submission, WDW claims that he is entitled to IRBs “in the weekly quantum of $400.00 from October 11, 2013 to date”. He expressly bases his claim on the detailed calculation by RSM. Aviva did not file a Reply submission in this matter, which I find means that the period of entitlement claimed by WDW is uncontested.

32The parties did not indicate that WDW's eligibility for entitlement to IRBs has changed on any basis – medical or financial -- since the October 2013 to September 2014 period. In both submissions, “entitlement” is argued on strictly financial grounds, the question being how to calculate the amount of the IRBs to which WDW is entitled.

33Aviva has not submitted any reasons why WDW should stop receiving IRBs or receive lower IRBs for the period after September 2014 (when Aviva stopped paying IRBs)⁴ in the event that I find for WDW on the issue of quantum.

34Given my findings on the calculation of WDW’s IRB entitlement, I find that WDW is entitled to IRBs in the amount of $400.00 for the period of October 18, 2013 to date.

Interest

35Section 51 of the Schedule sets out the criteria for assessing and awarding interest on overdue payments.

36Section 51(4) provides that interest on benefits in dispute is payable for the period that begins on the date on which an application is brought to the Tribunal and ends on the date a settlement is reached or a decision is issued.

37WDW is entitled to be paid interest on overdue IRB payments owed to him by Aviva at the prescribed rate.

Costs

38Rule 19.1 permits a party to request that the Tribunal order the other party to pay costs, where the requesting party “believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith”.

39WDW’s request is based on Aviva’s alleged “aggressiveness” and “bad faith” in disputing this and other claims arising from the accident.

40Rule 19.1 covers conduct related to this proceeding, and WDW provides no evidence that Aviva has conducted itself in the manner described by Rule 19.1 in the matter before me. Aviva’s conduct in related matters was dealt with by another adjudicator, as noted by WDW. Accordingly, WDW’s cost request is dismissed.

CONCLUSIONS

41WDW is not liable to repay $6,059.23 to Aviva for overpaid benefits.

42WDW is entitled to IRBs in the amount of $400.00 weekly for the period of October 18, 2013 to date. WDW is entitled to interest on any overdue payments at the prescribed rate.

43WDW’s request for costs in this proceeding is dismissed.

Footnotes

1. 1O.Reg. 34/10
2. 2Within the 12-month timeline prescribed for repayment notice by s.52(3) of the Schedule.
3. 3It was also noted as such in the RSM Report.
4. 4The reason