[The Applicant] v. Northbridge Personal Insurance Corporation, 2020 CanLII 14425

Citation: [The Applicant] vs. Northbridge Personal Insurance Corporation, 2020 ONLAT 18-000729/AABS

Released Date: 02/21/2020

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:

[The Applicant]

Applicant

and

Northbridge Personal Insurance Corporation

Respondent

DECISION

ADJUDICATOR:

Lori Marzinotto, Vice Chair

APPEARANCES:

For the Applicant:

Brad Duby, Counsel

For the Respondent:

Linda Kiley, Counsel

Shikha Sharma

HEARD in person:

October 22, 23, 25, 2018

(October 29, 2018 Written submissions)

PROCEDURAL HISTORY

1[The applicant] (the "applicant") was injured in an automobile accident on October 6, 2011 (the "Accident") and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the "Schedule").¹

2The applicant applied for certain medical benefits that were denied by the respondent. The applicant disagreed with the denials and submitted an application to the Licence Appeal Tribunal – Accident Benefits Service (the "Tribunal").

3An in-person hearing was held to determine the applicant's entitlement to income replacement benefits ("IRBs"), the period and the quantum of IRBs.

4The issues to be resolved at the hearing are as follows:

(i) Is the applicant entitled to receive weekly income replacement benefits from August 30, 2017 to date and ongoing?²

(ii) If the applicant is entitled to income replacement benefits, what is the quantum of the income replacement benefits?

(iii) If the applicant is entitled to income replacement benefits, is the applicant entitled to interest for the overdue payment of benefits?

The Respondent's Motion

5On July 11, 2018, the respondent served the applicant with a motion seeking the following relief ("Respondent's Motion"):

(i) repayment of income replacement benefits paid to the applicant for the period of October 13, 2011 to August 29, 2017;

(ii) a dismissal of the applicant's Tribunal application dated January 29, 2018;

(iii) interest on any amount outstanding from the applicant;

(iv) in the alternative, termination of the applicant's entitlement to income replacement benefits effective August 30, 2017;

(v) off-set for CPP disability benefits of amounts paid in the past and any future income replacement benefits owing to the applicant;

(vi) accountant's fees paid to Davis Martindale LLP ("DM") in the amount of $4,386.10; and

(vii) the respondent's costs

HEARING & MOTION RESULTS

6I find that the applicant is not entitled to receive weekly income replacement benefits from August 30, 2017 to date and ongoing and therefore dismiss the applicant's application. I find that the IRBs were terminated effective August 30, 2017.

7I find that the respondent is entitled to any CPP off-set should the applicant qualify for CPP benefits. The applicant conceded that if he receives CPP benefits then there will be a deduction for the IRBs.

8In terms of the respondent's motion for the repayment of IRBs from August 30, 2017 to date and ongoing, I reviewed the evidence and I am satisfied that it strongly establishes that the applicant misrepresented his employment status, misrepresented his income and submitted manufactured pay slips after the accident in support of his application for accident benefits. As a result, I find that the respondent is entitled to repayment of IRBs paid to date in the amount of $59,817.21.

9The applicant's credibility has been called into question in these proceedings. I find that the numerous inconsistencies in the applicant's evidence is enough to disentitle the applicant to IRBs and substantiates the respondent's allegations of the applicant's wilful misrepresentation.

10The respondent's request for payment of DM's accounting fees in the amount of $4,386.10 is denied. The Tribunal lacks jurisdiction to order the repayment of costs of adjusting the file by the respondent.

11The respondent's request for costs is denied. I do not find that the applicant acted unreasonably, vexatiously and in bad faith during the proceeding which would entitle the respondent to costs.³

12The applicant's request to dismiss the Respondent's Motion is denied as is his request for costs of responding to it.

13I find that the applicant has failed to establish entitlement to IRBs in any amount and the fact that the applicant agrees to accept an IRB amount calculated by DM does not mean that he is entitled to that amount.

Applicant's Responding Motion Material

14The applicant's responding motion material, dated October 16, 2018 seeks a dismissal of the respondent's motion and the applicant's costs in responding to the motion.

15The applicant submits that the Tribunal does not have jurisdiction to hear this motion as part of an on-going proceeding and that the respondent insurer must bring a separate proceeding to seek an order for repayment.

16I disagree. Issues are added to hearings where appropriate to ensure efficient, proportional and timely resolution of the merits.⁴ As a matter proceeds through the Tribunal's adjudication process, a case conference is held. Rule 14.2 of the Common Rules states the scope of a case conference is to consider, inter alia, the identification, clarification, simplification and narrowing of the issues and whether further particulars are required,⁵ as well any motion brought by a party in accordance with Rule 15.⁶

17The Respondent's Motion was served on July 11, 2018. The parties attended a case conference on July 23, 2018 where the Respondent's Motion was mentioned. The parties also attended a case conference on August 22, 2018 where the Respondent's Motion was confirmed.⁷

18On September 10, 2018, the parties attended another case conference at which time the Tribunal ordered that the Respondent's Motion would be heard with the issues in dispute identified in the application. There is no indication in the Order that the applicant objected to the Respondent's Motion being heard at the hearing and the parties agreed to deadlines to file their submissions and evidence relating to the motion.⁸

19In any event, the applicant's entitlement to IRBs is at the heart of the dispute between the parties, both in terms of the original issues in dispute and the Respondent's Motion. The Tribunal should promote efficiency in adjudication and consistency in outcomes.

20The applicant also submits that the Tribunal does not have jurisdiction to re-calculate the quantum of IRBs; rather, the calculation should be referred to an accountant. I disagree. Inherent to its statutory power to adjudicate the accident benefits disputes between the parties, the Tribunal must be able to determine the quantum of IRBs, and frequently does so. Section 280 of the Insurance Act assigns to the Licence Appeal Tribunal the authority to adjudicate accident benefits disputes in accordance with the Schedule. Part II of the Schedule sets out the framework for determining the amount of IRBs, if an applicant is entitled to receive them. Further, it is the applicant's onus to prove entitlement and quantum, and to present sufficient evidence to allow the Tribunal to determine the quantum.

21The applicant argues that there is no dispute that the "applicant was working and earning income at the time of the motor vehicle accident."⁹ I disagree. Given the evidence at the hearing, there is clearly a dispute as to whether the applicant was "earning income." By the applicant's own admission, he did not receive a salary from [business A], and he has not proven income from [business B]. This will be further addressed in this decision.

22The applicant also argues that he has complied with all requests for information from the respondent. I disagree. Although the applicant may be able to point to several documents he provided to the respondent, they did not satisfy the respondent's requests. The respondent is unable to calculate the IRB based on what the applicant has submitted which included made-up pay slips for income he did not earn. This will be further addressed in this decision.

BACKGROUND

23On May 29, 2014, the applicant was deemed catastrophically impaired as a result of an accident that occurred on October 6, 2011.

24At the hearing, the parties confirmed that medically, entitlement to IRB is not at issue. It is assumed that the applicant medically meets the test for IRBs.

25The applicant submitted an Application for Accident Benefits (OCF-1) dated November 25, 2011.¹⁰ The application indicates that the applicant was employed at the time of the accident, not self-employed, and that details of employment would be sent in.

26The applicant submitted an Employer's Confirmation Form (OCF-2) dated November 2011,¹¹ which indicated that he was employed by [business A], made $300 to $900 per week and was signed by the applicant's wife as President of [business A].

27On December 4, 2011, the applicant submitted a statement to the respondent (the "Statement"). The applicant was with a lawyer at the time and the applicant signed and dated the Statement. In the Statement, the applicant confirms, among other things, that he was employed and not self-employed.¹²

28The respondent retained DM to calculate an amount of IRBs to which the applicant may be entitled.

29The respondent's adjuster, Anthony Jorge, gave evidence that the respondent regularly sends files involving persons working in the trucking industry to accountants to calculate IRBs.

30DM calculated an amount of IRBs based on documentation submitted by the applicant. In their November 23, 2012 report, DM calculated an IRB amount of $197.93 per week based on documentation they received from the applicant. DM requested additional information from the applicant which was not received at the time of DM's November 2012 calculation. DM advised that should it receive the additional information, its recommendation in the November 23, 2012 report may change.

31The respondent paid the applicant IRBs in the amount of $197.93 per week. The respondent paid the applicant a total of $59,817.21 in IRBs from October 13, 2011 to August 29, 2017.

32The respondent suspended the applicant's IRBs for failing to provide the additional documentation requested by DM pursuant to s. 33 of the Schedule and advised the applicant that no benefit is payable until the applicant complied with the s. 33 request and provided a reasonable explanation for the delay for the non-compliance.¹³

33As described later in this decision, DM subsequently concluded that the applicant was self-employed, and not employed as the applicant stated on his application for benefits.

34Although DM concluded that the applicant was self-employed, the respondent received documentation from the applicant that made it appear that he was an employee.

35The respondent gave evidence that it requested an Assignment of Workplace Safety & Insurance Benefits (the "Assignment") because it appeared that the applicant had been injured during the course of employment. If true, then the applicant may have been entitled to benefits under the workplace safety & insurance scheme, which in turn, may affect the benefits payable by the respondent.¹⁴

36The applicant provided the Assignment on December 14, 2011.¹⁵

37A Workplace Safety and Insurance Appeals Tribunal ("WSIAT") hearing concerning the applicant took place on September 13, 2016. In its decision dated January 19, 2017,¹⁶ the WSIAT considered whether the applicant was a worker, an independent contractor or an executive officer, and found that the applicant was not a worker. The WSIAT found that the applicant either worked as an executive officer of his wife's company or as a sole proprietor who was not working under a contract of service at the time of the accident and therefore not entitled to WSIA benefits (the "WSIAT Decision").¹⁷

38Here in lies the controversy. Adjuster Jorge read the WSIAT Decision and, given the noted discrepancies in the evidence provided at the WSIAT hearing and the applicant's documents provided to the respondent, investigated the applicant's file further. He requested information that was never provided by the applicant in 2011 following the accident. Jorge noted the evidence in the WSIAT hearing indicated that the information provided by the applicant in support of his claim for IRBs is essentially false.

39In his application for benefits, the applicant represented to the respondent that he was employed, earned income and provided documents to the respondent to substantiate an accident benefits claim. The respondent paid the applicant IRBs based on the applicant's evidence.

40The respondent insurer has the burden to prove wilful misrepresentation under s. 53 of the Schedule, including that it was wilful and proof that what the applicant misrepresented was a material fact respecting the application for accident benefits. The consequences of a wilful misrepresentation finding are harsh, that is, the accident benefits would be nullified.¹⁸

ANALYSIS

41The applicant's evidence is replete with inconsistencies. I am satisfied that he misrepresented facts and evidence in order to pursue an accident benefits claim especially with respect to:

(i) Whether the applicant was employed or self-employed;

(ii) Reported income & income documentation;

(iii) Responses to further requests for information from the respondent;

(iv) "Other employment income" of $30,000;

(v) Purported change in ownership of [business A];

(vi) Functioning on surveillance; and,

(vii) Previous accident claim.

Employed or Self-Employed

42The respondent submits that the applicant misrepresented his employment status in his application for accident benefits. I agree.

43The applicant's evidence of employment and income changed depending on what suited him, which I find amounts to wilful misrepresentation.¹⁹ There are simply too many versions of employment or self-employment and too many versions of "income" to allow me to assign any weight to the applicant's evidence.

44The applicant is not unsophisticated in business. The applicant gave evidence that he has been involved in several businesses since the early 2000s including a number of business structures for income splitting, tax planning and limiting liability. The entities included [business B] (sole proprietorship), [business C] and [business D].

45The greatest inconsistency was that the applicant applied for accident benefits, specifically IRBs, indicating he was employed yet he admitted that he was self-employed.

46The applicant admitted he knew what "employed" and "self-employed" meant. His OCF-2²⁰ indicated he was employed. The applicant confirmed that he read the document before submitting it to the respondent, that he completed the form including the "employed" section and his wife (as president of [business A]) signed it.

47At the Tribunal hearing, the applicant admitted that he indicated he was employed because it would be too hard to prove income for accident benefits otherwise. He indicated that his lawyer told him this²¹.

48The applicant's evidence at the WSIAT hearing was that he was not a worker but a self-employed truck driver.²² In its decision, the WSIAT found that he was not a worker.

49The applicant confirmed during the Tribunal hearing that he was self-employed and went as far as saying that "there's no doubt at all."

50This contradicts the Statement he provided to the respondent.

51At the Tribunal hearing, the applicant confirmed that what he attested to in the Statement was correct, specifically:

(i) That he was employed at the time of the accident as a long-haul commercial truck driver for [business A];

(ii) He was the sole employee for [business A] at the time of the accident;

(iii) That his wife is the sole registered owner of the [business A];

(iv) She operates the business at her home address;

(v) His wife issues him a T4 and deducts all provincial and federal taxes and CPP from his pay;

(vi) He had been working for his wife since May 2011;

(vii) Sometimes his wife pays him by cash and sometimes by cheque;

(viii) At the time of the accident, [business A] was his only source of income; and

(ix) At the time of the accident, he was earning a gross income of $1,000 per week.

52An insurer may terminate benefits if the insured person wilfully misrepresented material facts with respect to the application of benefits and provides the insured notice setting out the reasons for termination.²³

53Employment status is fundamental in an application for IRBs. Employment status determines the eligibility criteria, the amount of the benefits and the commencement and termination of the benefits.²⁴

54Given the above, especially his admission that he represented to the respondent that he was an employee because it would be easier to seek IRBs than if he were self-employed, I find that the applicant made a deliberate and willful decision to misrepresent his employment status to the respondent.

Reported Income / Income Documentation

55In addition to the employed versus self-employed discrepancies, there were discrepancies in the income amounts reported by the applicant.

56The OCF-2 indicated that the applicant earned approximately $300 to $900 per week and gross wages of $2,527.41 based on the four weeks of salary prior to the accident.

57However, on the Statement, the applicant indicated that he was paid "sometimes by cash and sometimes by cheque" and that he was earning $1,000 gross per week.

58At the Tribunal hearing, the applicant indicated that what he stated at the WSIAT hearing, i.e. he was earning $1,000 per week, was not correct. When his counsel asked him to confirm whether $1,000 was correct or incorrect, the applicant replied that he did not know and that he would have to look at all of the paperwork.

59Ms. Hawley, an accountant at DM was qualified as an expert witness. On January 31, 2012,²⁵ DM flagged to the respondent their concerns with the accuracy of the information provided to date.

60In the January 31, 2012 letter, DM pointed out that given the applicant is not at an arm's-length from [business A] (he is the spouse of the owner of [business A]), it is necessary to look beyond the actual amount a non-arm's length person is paid by the business.

61DM required more information to calculate the IRB. DM listed a number of documents it required, including but not limited to: documentation to support the amounts paid to the applicant from October 2011 to present, if any; [business A]'s financial statements for the most recent fiscal year completed prior to the accident; [business A]'s T2 corporate income tax return; and details regarding the average weekly hours worked and duties performed by the applicant prior to the accident.

62A follow-up report from DM dated May 17, 2012 raised concerns regarding the accuracy of the information provided for the applicant's claim for the IRB.²⁶

63DM determined that there were inconsistencies in when the applicant started working at [business A] and in what his gross income was. DM had no evidence to show that the amounts listed on the applicant's pay statements from [business A] were actually received by him. They also noted that cheques issued to the applicant from [business A] for payment from [business A] were payable to cash and the applicant's income from [business E]²⁷ did not reconcile with the bank statements received from the applicant.

64Based on the documents DM received to date, DM calculated a "potential" entitlement to IRB in the amount of $223.11 for the October 14 to November 30, 2011 period and an amount of $0 for the December 1 to December 31, 2011 period. DM noted that they had not been provided with information in order to calculate the applicant's "potential" IRB beyond December 31, 2011.

65Importantly, DM recommended to the respondent that no benefits be paid to the applicant because they had not been provided with sufficient information to calculate the quantum of IRBs.²⁸

66A further follow-up report from DM dated November 23, 2012 (the "November 2012 Report")²⁹ listed the documents DM reviewed and those documents that DM requested but still did not receive. DM confirmed that it had not been provided with [business A]'s corporate income tax return or notice of assessment for 2011, either of which would be required to verify [business A]'s revenues and expenses.

67DM calculated the applicant's pre-accident gross income considering his T4 from [business A]³⁰ which the applicant reported on his 2011 personal income tax return. The T4 amount was $10,311.16 which corresponded with the amounts indicated in his pay slips from [business A].³¹ DM also included net income from [business E] in the amount of $4,391.76 in its calculations.

68Assuming the applicant continues to be unable to work and [business A] does not operate, DM suggested continuing IRBs in the amount of $197.93 per week pending its next review and indicated that its calculations are based on limited financial information and listed additional information they required. The report also indicated that if they were provided with additional information, their recommendation may change.

69Based on the November 2012 Report, the respondent agreed to pay the applicant $197.93 per week for IRBs, subject to the missing information the respondent had not received.

70At the WSIAT hearing, the applicant submitted the pay slips and produced a T4 for the 2011 income tax year in the amount of $10,311.16,³² which the applicant stated was self-employment income.³³ During the Tribunal hearing, the applicant stated that this income was "employee income" yet he also stated unequivocally that he was self-employed.

71At the WSIAT hearing, the applicant gave evidence that he never received those pay cheques and that the pay slips were never issued to the applicant by [business A].³⁴

72At the Tribunal hearing, the applicant confirmed that the pay slips were made up after the accident by his accountant "Kumar." The applicant also stated that the company did not issue him a T4 by the end of the year.

73At the WSIAT hearing, both the applicant and his spouse stated that the applicant never received a salary from the company in 2011 and that operating expenses were generally higher than revenue. At times, the applicant had to add some of his own money in order to cover the business expenses.³⁵ It appeared that the business was operating at a loss.

74The applicant's 2011 tax return, also prepared by "Kumar," indicates that the applicant's earnings (i.e., on his T4) totaled $10,311.

75By the applicant's own admission, the pay slips were created after the accident, the T4 was based on the amounts in the pay slips and he never received a salary from the company in 2011. The T4 is inaccurate because it was based on pay slips that, themselves, were inaccurate.

76I find the applicant's 2011 tax return to be unreliable: the pay slips and T4, which would form a key informational basis for that tax return, have questionable origins and are contradicted by the evidence given at the WSIAT hearing by the applicant and his spouse. Accordingly, I assign no weight to those documents.

77Given that the applicant submitted falsified documentation, and DM relied on the manufactured documents to calculate the IRB, the $197.93 amount of IRBs that DM calculated cannot be accurate. Given the applicant did not receive an income, the applicant would not be entitled to an IRB payment in that amount.

78Although there is case law which states that income tax returns are prima facie proof of income, this is only true where there is no evidence to the contrary. In Hua Li Pan v. Allstate Insurance Company of Canada, the arbitrator accepted the applicant's self-employment income in her tax return was a valid and reliable number for the purposes of calculating an IRB.³⁶ However, that is not the case here when the applicant admitted he did not receive a salary and did not receive the cheques that correspond with the pay slips. The applicant's T4, which was used for his 2011 income tax return, was based on the "made up" pay slips.

79Given the above, and that the onus is on the applicant to prove his income in his application for IRB, I find I do not have valid and reliable income information with which to calculate an IRB.

Response to Further Requests for Information

80The respondent could not ignore the WSIAT Decision. It had an obligation to investigate and began asking for information that was never provided by the applicant in 2011.

81Section 33 of the Schedule places a duty on the applicant to provide the insurer with any information reasonably required to assist an insurer in determining the applicant's entitlement to a benefit.³⁷

82The applicant submits that he complied with the respondent's requests for information. I find that he did not comply.

83Pursuant to s. 33 of the Schedule, the respondent's OCF-9 dated April 5, 2017, requested from the applicant "an accounting," 2011 financial statements of [business A] and a breakdown of the amount allocated to "salary and wages" on the 2011 corporation tax return of [business A].³⁸

84On cross-examination, the respondent's adjuster, Jorge, admitted that the phrase "an accounting" in the request could have been worded better to make it clearer. While I agree that this wording in the April 5, 2017 OCF-9 could have been clearer, there were several follow-up requests with which the applicant failed to comply.

85The respondent again wrote to the applicant on August 29, 2017 (OCF-9)³⁹ and indicated that the respondent had not received a response to their April 5, 2017 s. 33 request and no benefit was payable until the applicant complied with the s. 33 request.⁴⁰

86On September 8, 2017, the applicant indicated that he was responding to the August 29, 2017 request and indicated in the letter⁴¹ that he was including:

(i) financial statement of [business A/business B] from June to December 2011;

(ii) the applicant's employee pay slips for June to September 2011 from [business A];

(iii) a copy of a pay cheque to R. S., who was hired by [business A] in 2011 after the applicant's accident;

(iv) the breakdown of "salary and wages" on the 2011 corporate tax return of [business A], i.e. $10,311.36 to the applicant and $2,000.00 to R. S.

87On September 22, 2017 the respondent replied via OCF-9⁴² to the applicant indicating that it received the revenue and expense sheets on September 8, 2017. These were the same documents previously received by the respondent on January 9, 2012 in support of the application as an "employee" of [business A]. In contrast, the WSIAT found the applicant was not a worker, and the applicant agreed, that he was self-employed. The employment information that the applicant submitted, indicating that he was an "employee," was inaccurate. Much of what the respondent received from the applicant was a duplicate of what it received previously and was inaccurate as it indicated the applicant was an "employee" and not "self-employed."

88The respondent further indicated that it required documentation that established the applicant's "self-employment income," and the unaudited 2011 financial statements of [business A], which included a breakdown of the amounts specified in the 2011 corporate tax returns under "salary and wages."

89The revenue & expenses statement from June 1, 2011 to September 31, 2011 indicated a driver pay total of $10,311.36.⁴³ This amount corresponded to the amounts indicated on the pay slips⁴⁴ provided by the applicant, which he admitted were never paid and were made up after the accident to reflect an income for the purposes of obtaining accident benefits. The amount of the T4⁴⁵ was also $10,311,16⁴⁶ which is roughly the same total of the pay slips.

90The applicant admitted on cross-examination that he did not know who created the revenue & expense statement,⁴⁷ when it was created or what source documents were used to prepare the document. The applicant could not, with any clarity, answer questions regarding [business B] or [business A] even though he indicated that [business A] was essentially his company and he was the sole proprietor of [business B].

91The applicant repeatedly submitted that he provided the documents requested by the respondent; however, I find he did not. While I agree with the proposition in Liberty Mutual Insurance Company v. Morabito⁴⁸ that a self-employed person should not be held to a standard of precision when it comes to recordkeeping, this is not applicable in this case. In this case, the applicant's recordkeeping consisted of made-up documents.

92In this case, the applicant changed his story depending on what suited him. The applicant had source documents created after the accident to show an income in order to receive accident benefits. The applicant applied for IRBs when he admitted he did not receive the income he reported on his 2011 tax return.

93This is not a case where the respondent was requesting a long list of documents from the applicant to delay payment of benefits. On the contrary, the respondent paid benefits to the applicant in good faith for years and advised the applicant that the amount may change once it receives the requested information.

94The respondent repeatedly made requests for financial documentation and received the duplicated and/or inaccurate documents that the applicant admitted were made up.

95The respondent's requests for information were made pursuant to s. 33 of the Schedule which was reiterated to the applicant in numerous OCF-9s and letters dated April 5, 2017,⁴⁹ August 28, 2017,⁵⁰ and September 22, 2017.⁵¹

96Ms. Hawley confirmed that the documents requested in the respondent's letter of January 31, 2012⁵² were not provided by the applicant.

97Ms. Hawley confirmed that she did not receive the corporate tax returns beyond 2011.⁵³ She did receive personal tax return summaries for the applicant for the years 2006 to 2014; however, she indicated that these are not sufficient on their own. She was unable to calculate the IRB.

98Given the above, I am satisfied that the applicant failed to respond to the insurer's requests made pursuant to s.33 of the Schedule.

"Other employment income" of $30,000

99The respondent received a letter from the applicant dated May 23, 2018,⁵⁴ which attached "a completed OCF-2 by [business B] (sole proprietorship), Master Business Licence for [business B], and a T1 Adjustment Request and revised tax return for tax year 2011." The T1 Adjustment Request indicated that the applicant received "other employment income" in the amount of $30,000. The letter further indicated that the documents, the WSIAT Decision and the reports prepared by DM were evidence of self-employment income. The applicant requested that the respondent reinstate the IRB and to also re-calculate the IRB based on the applicant's re-filing of his personal 2011 income tax return which now included an additional $30,000 income.

100DM was still unable to calculate an IRB based on [business A]'s 2011 corporate tax return and had questions regarding the "other employment income" of $30,000. The OCF-2 from [business B] (the sole proprietorship) which accompanied the T1 Adjustment Request reported the $30,000 as self-employed gross income. [business A]'s 2011 corporate tax return did not show a corresponding expense for the additional $30,000 now reported by the applicant. DM also pointed out that the applicant incorrectly reported the $30,000 as "other employment income" when it should be reported as "self-employment income."

101DM was unable to determine the source of the additional $30,000 income. It appeared to DM that the applicant was amending his 2011 income tax return in support of his IRB claim. Accordingly, the source of the additional $30,000 needed to be verified and DM requested further information.⁵⁵

102At the Tribunal hearing, the applicant initially stated that he did not know who prepared the T1 Adjustment Request but then stated that it was prepared through his lawyer by the accountant, said it was not his writing but was his signature, said he did not provide the information, did not give any instructions for the T1 and, most notably, the applicant indicated that he did not have any idea where the $30,000 income came from.

103Importantly, the applicant confirmed at the Tribunal hearing that the revised amended income tax return indicating "other employment income" (and not "self-employment income") of $30,000 was not filed with CRA. The applicant abandoned his claim for a re-calculation of the IRB. At the hearing, the applicant submitted that he was content with the IRB figure of $197.93 per week.

104Given the above, I am not satisfied that the $30,000 additional income for the applicant is either accurate or that it existed.

Purported Change of Ownership of [business A]

105In an attempt to respond to the respondent's request for the corporate tax returns and notices of assessment for [business A] for the 2011 to 2017 tax years, the applicant provided the respondent with a Notice of Change for [business A].

106In correspondence dated June 7, 2018, the applicant advised the respondent that [business A] was sold or that the ownership was transferred in November 2014. The respondent was provided with a Notice of Change Form purporting to change [business A]'s ownership from J.S. (the applicant's wife) to a third party on or about November 5, 2014.⁵⁶ At the Tribunal hearing, the applicant described the third party as his friend's wife.

107At the hearing, the respondent submitted that the Notice of Change form is normally used to add or remove a director and not used for a transfer of ownership.

108A corporate search conducted by the respondent on June 8, 2018,⁵⁷ shows that the applicant's wife is still an officer of the corporation. The respondent did not have information that showed when [business A] ceased operating under the applicant's wife's ownership.

109Curiously, in correspondence dated May 29, 2018 (just 7 days prior to the June 7, 2018 correspondence indicating [business A] ownership was transferred), the applicant did not mention the transfer of corporate ownership of [business A], but confirmed that [business A] was 100% owned by the applicant's wife.⁵⁸ This directly contradicts that ownership of [business A] was transferred from the applicant's wife to a third party in November 2014. There was no evidence at the hearing that supported a transfer of ownership.

110The evidence of the applicant at the hearing was that [business A] was in operation between 2004 and 2008, ceased operations, and then restarted some time in 2011 (May or June) just after he left [business E]. The applicant submitted monthly pay slips, with the first one being from June 2011. The accident occurred in October 2011. The applicant indicated that his wife tried to run the business without him but could not and that it closed in early December 2011. [Business A] was in operation for approximately 4 months at the time of the accident.

111It is important to note the evidence of the applicant regarding [business A] and [business B] as it appears that the applicant was using the business names [business A] and [business B] interchangeably for business reasons. The applicant stated that [business A] was referred to as [business B] and that they did their invoices as [business B] to their customers. He indicated that initially the bank account was [business A] but most of the cheques said [business B]. He also indicated that there was no separate bank account and [business B] (sole proprietorship) would deposit [business B] cheques in the [business A] account.

112Given the above, I am not satisfied that there was a change of ownership in November 2014, as asserted by the applicant.

Repayment

113On April 5, 2017 (OCF-9)⁵⁹ the respondent raised the issue of repayment of the IRB with the applicant.

114On June 19, 2018, the respondent advised the applicant via OCF-9 with an attached letter, of the stoppage of IRBs, and that it was seeking the repayment of the IRBs it paid the applicant from October 13, 2011 to August 29, 2017 as a result of the applicant's wilful misrepresentation pursuant to s. 52 of the Schedule. The respondent was also seeking interest pursuant to s. 52(5) of the Schedule.⁶⁰

115In closing submissions, the applicant stressed that the respondent had suspended the IRB and not terminated the IRB.⁶¹ I do not find this submission persuasive given that the stoppage of benefits was clearly communicated to the applicant in the June 19, 2018 letter and OCF-9.

Surveillance of the Applicant

116The respondent conducted surveillance of the applicant. The surveillance adds substance to the allegation that the applicant is not credible.

117The surveillance report dated December 2, 2015,⁶² indicated surveillance was conducted on September 30, 2015 and October 1, 2, and 3, 2015.⁶³

118Two occupational therapy assessments were conducted by Jeff Ford, one in-person on June 23, 2017,⁶⁴ and one paper review dated August 24, 2017⁶⁵ (the "OT Reports").

119It is clear from the OT Reports that Mr. Ford reviewed the surveillance from October 2015. He further notes inconsistencies or questionable effort put forward by the applicant and noted that he reviewed surveillance with the applicant. Mr. Ford opines that the applicant's functional presentation on the surveillance is inconsistent with how he presents during medical assessments.

120Mr. Ford indicated that, given the applicant's sub-optimal presentation and review of surveillance, he could not find any objective or verifiable evidence to substantiate an ongoing functional limitation that would require attendant care.

121Mr. Ford questions some of the behaviour of the applicant in the surveillance on October 1-2, 2015 including how the applicant was seen walking without the use of a cane yet notes, minutes later, the applicant using a cane. In particular, on October 1, 2015, I note from the surveillance and the surveillance report that, at 10:33 a.m., the applicant exited his vehicle and walked across a laneway on uneven surfaces and entered a cultural centre without the use of a cane. When he left the cultural centre at 11:09 a.m., he walked back to his vehicle and walked over a curb also without the use of a cane. Yet, on his arrival at Maxime Physio Rehab at 11:22 a.m., he exited the vehicle holding a cane with his right hand and semi-pulled himself up to stand. When he exited Maxime Physio Rehab, he was again using a cane. He slowly lowered himself into the passenger seat and pulled his right leg into the vehicle.

122In the afternoon of October 1, 2015, the applicant was subsequently observed departing his home, walking into a business and returning to the vehicle without the use of a cane at 3:38 p.m. At 3:57 p.m., he went to a shopping plaza, walked along the plaza sidewalk and shopped at two stores until he left at 4:33 p.m. At 4:44 p.m., the applicant went to an electronics store and the applicant exited carrying a bag. At 4:52 p.m., he exited a variety store then departed the area. At 4:56 p.m., he attended a food market where he was observed carrying a shopping basket containing produce. At 5:08 p.m., he exited the market and entered the driver's seat and reversed the vehicle and drove out of the parking area. At 6:15 p.m., he arrived back at his residence carrying two bags on his left arm into the residence. All of these afternoon activities were done without the applicant using a cane.

123Mr. Ford noted that documentation provided by Dr. Chang indicated that the applicant was using a cane and dragging his right foot on July 22, 2015 and was noted using a cane on November 4, 2015 and November 25, 2015.

124The applicant was asked to respond to queries made by Mr. Ford in his report regarding the observations on the surveillance. The applicant indicated that he uses a cane when necessary depending on his level of activity and where he will be walking. The applicant indicated that on the morning of October 1, 2015, he was attending the cultural centre and activities there required kneeling, sitting and bending, which aggravated his injuries and he was in discomfort when he later went to physiotherapy. He did not need the cane after physiotherapy because the treatment helped.⁶⁶

125Also, the applicant indicates that on November 4, 2015, he saw Dr. Chang before attending physio and brought the cane in case he became fatigued or would be walking on uneven surfaces. Recalling the surveillance of October 1, 2015, I note the applicant walked on uneven surfaces to attend the cultural centre and returned to his vehicle without the use of the cane. In addition, he attended at least another 6 stores starting around 3:30 p.m. and arriving back home at 6:15 p.m. without the use of the cane that day. In addition, the applicant was not observed using a cane during surveillance on September 30, 2015 or October 2, 2015.

126Mr. Jorge was questioned on the number of days that surveillance was conducted on the applicant. There was surveillance conducted in 2012, 2013, 2014 and 2015 yet the respondent did not terminate the benefits. In response, Mr. Jorge stated that the respondent did not terminate the benefits based on the surveillance because they were giving the applicant the benefit of the doubt, that he may have one good day and one bad day.

Canada Pension Plan (CPP)

127The respondent seeks an off-set for CPP disability benefits of amounts it paid in the past and any future IRBs owing to the applicant.

128Although an insurer cannot force an applicant to apply for CPP disability pension benefits, it is entitled to an off-set for the CPP disability pension benefits where they may be available. The applicant has a duty to mitigate losses.

129Pursuant to s. 3(7)(d)(i) of the Schedule, CPP disability pension benefits are an "income continuation benefit plan."

130Pursuant to s. 7(1)(a) of the Schedule, IRBs are calculated by determining a weekly base amount of income, less the total of all "other income replacement assistance."

131Pursuant to s. 4(1)(b) of the Schedule, "all other income replacement assistance" includes any gross weekly payment for loss of income excluding those set out in s. 4(1)(a). CPP disability pension benefits are not included in s. 4(1)(a) and, therefore, count as "all other income replacement assistance" for the purposes of calculating IRBs under s. 7(1)(a).

132The net effect of these provisions is that the respondent is entitled to an off-set based on any CPP disability pension benefits if the applicant qualifies for them. In other words, the insurer is the payor of last resort.

133As stated in Pan v. Allstate, the provisions in the Schedule require an applicant to pursue other income replacement assistance.⁶⁷

134As of June 7, 2018, (which is over 7 years post-accident), the applicant had not applied for CPP disability benefits.⁶⁸ I find the insurer would be and is entitled to off-set the applicable quantum of CPP disability pension benefits. In Pan, the arbitrator found that eighteen months post-accident was a reasonable and sufficient time for the applicant to have applied for CPP.⁶⁹

135In his materials, the applicant indicates that, on July 12, 2018, he applied for CPP disability pension benefits.

136Based on Ms. Hawley's knowledge, the amount a person received as CPP disability pension benefits from published amounts is approximately $950 per month. Indexing back for the period the applicant would be entitled to receive CPP disability pension benefits and assuming that he applied within eighteen months of the October 2011 accident, Ms. Hawley estimated that the applicant would have received approximately $920 to $930 per month (in 2013). Ms. Hawley then calculated that the applicant would have been overpaid by $45,000 for the past IRBs.

137The applicant's motion material indicates that he is waiting for confirmation of his entitlement to CPP disability pension benefits and he also agrees that a sum would be deducted from IRBs should he qualify.

Previous Accident - Credibility

138In addition to the issues of credibility already addressed, I also note the applicant's previous accident benefits claim with TD Insurance from a May 2010 accident. As of July 2011, the applicant claimed he was unable to work. In his orthopaedic report dated July 23, 2011,⁷⁰ Dr. West concluded that the applicant continued to suffer a substantial inability to perform the tasks of his pre-accident employment. This was also around the time that the applicant stated he had left [business E] and also stated that [business A] was restarted (May or June 2011).

139While Dr. West was opining that the applicant was substantially unable to perform the tasks of his pre-accident employment, the applicant, at the same time, represented to the respondent that he was working at [business A] and [business B] from June 2011 to September 2011 and earned $10,311.36 from [business A] and earned an additional $30,000 from [business B]. The evidence in the WSIAT hearing and this hearing established that the applicant did not earn $10,311.36 from [business A] and that the applicant did not file an amended tax return for the purported $30,000 additional "other income" for 2011.

CONCLUSION

140The applicant's accountant "Kumar" was not called as a witness. Given the lack of verifiable source documentation and inconsistency in the information, the evidence of the accountant was necessary in order to answer crucial questions about the applicant's evidence including the pay slips, tax returns and corporate accounting records provided to the respondent in support of the claim for accident benefits.

141The documents provided to the respondent, the OCF-2,⁷¹ the Statement, the pay slips, and the T4 all indicate that the applicant was an employee yet the applicant was clear and insistent in his evidence that he was self-employed. The applicant admitted that he represented himself as employed because it would be easier to apply for IRBs than if he indicated he was self-employed.

142The applicant argued that he provided sufficient documentation in order for the respondent to calculate an amount for IRBs. The applicant even asserted that the source documentation was "undisputed." By the applicant's own admission, he had pay slips created to support an accident benefits claim and did not receive an income. His 2011 income tax return was filed based on the made-up pay slips. To say that the source documentation is "undisputed" is disingenuous.

143Given the inconsistencies in the OCF-1, the OCF-2, the evidence at the WSIAT hearing, the creation of documents in support of accident benefits, attempting to revise his 2011 income tax return to include $30,000 of income for which the applicant has no information, the purported change of ownership of [business A], looking at the surveillance and the previous accident benefits claim where the applicant was claiming to be impaired while at the same time indicating that he had earnings for the October 2011 accident, leads me to conclude that the applicant's evidence is not credible.

144The respondent's calculation of IRBs at $197.93 per week was based on falsified or made up information from the applicant, including pay slips for income he never received.

145Based on the evidence before me, I find that the applicant misrepresented material facts to the respondent with respect to his application for benefits. Crucially, I am satisfied on the evidence of the applicant's willfulness in the misrepresentation to the respondent.

COSTS

146Given that I have dismissed the applicant's application, the applicant is not entitled to costs.

147I do not find that the applicant acted unreasonably, vexatiously and in bad faith during the proceeding which would entitle the respondent to costs.⁷²

ORDER

148For the reasons outlined above, I find the following:

(i) The applicant is not entitled to IRB from August 30, 2017 to date and on-going;

(ii) The applicant's request to dismiss the respondent's motion and request for costs are denied;

(iii) The applicant's application is dismissed;

(iv) The applicant wilfully misrepresented material facts on his application and the respondent is entitled to a repayment of IRBs paid to date in the amount of $59,817.21;

(v) The respondent is entitled to interest on the outstanding balance of the amount to be repaid in accordance with s.52(5) of the Schedule;

(vi) The respondent is entitled to any CPP off-set should the applicant qualify for CPP disability pension benefits;

(vii) The respondent's request for payment in the amount of $4,386.10 for DM's accounting fees is denied; and

(viii) The respondent's request for costs is denied.

Footnotes

1. 1O. Reg. 34/10.
2. 2At the commencement of the hearing, the parties confirmed the time period being sought for the IRB claim.
3. 3Rule 19.1, Common Rules of Practice & Procedure, Licence Appeal Tribunal, Animal Care Review Board, Fire Safety Commission, October 2, 2017 (the "Common Rules").
4. 4Rule 3.1 of the Common Rules.
5. 5Rule 14.2(c) of the Common Rules.
6. 6Rule 14.2(k) of the Common Rules.
7. 7Order dated July 23, 2018 and Order dated August 22, 2018.
8. 8Order dated September 23, 2018
9. 9Applicant's Responding Motion Material dated October 16, 2018 at para.6.
10. 10Respondent's Motion Record, Tab 1, Exhibit #5.
11. 11Respondent's Motion Record, Tab 16, Exhibit #9
12. 12Respondent's Motion Record, Tab 21, Exhibit #13
13. 13Respondent's Motion Record, Tab 13, Exhibit #17 (OCF-9 dated August 29, 2017).
14. 14Section 61 of the Schedule.
15. 15Respondent's Motion Record, Tab 22, Exhibit #33.
16. 16Respondent's Motion Record, Tab 25, Exhibit #15.
17. 17WSIAT Decision No. 2287/16, dated January 19, 2017, 2017 ONWSIAT 216 at para. 38, Respondent's Motion Record, Tab 25, Exhibit #15 ("WSIAT Decision").
18. 18Jozsef Szabo v. CAA Insurance Company (Ontario), FSCO A02-000678, March 14, 2003 at page 4
19. 19Aviva Canada v. S.A., 2016 CanLII 96164 (ONLAT) at para. 27.
20. 20OCF-2 dated November 24, 2011, Respondent's Motion Record, Tab 16, Exhibit #9
21. 21The applicant was previously represented by different counsel, not Mr. Duby.
22. 22WSIAT Decision, at para. 31
23. 23Schedule, ss. 53(a) & 53(b)
24. 24Jozsef Szabo v. CAA Insurance Company (Ontario) at page 4.
25. 25Respondent's Motion Record, Tab 27, Exhibit #29.
26. 26Respondent's Motion Record, Tab 27, Exhibit #29.
27. 27The duration the applicant worked for [business E] was unclear. For the purpose of DM's preliminary IRB calculation, earnings from [business E] were not considered. Based on DM's review of the applicant's pay statements from [business E], the applicant earned $6,212.16 from February 2011 to April 2011; however, TD Canada Trust bank statements only showed $5,911.00 from [business E] which were labelled as "transfer"; DM Report dated May 17, 2012, Respondent's Motion Record, Exhibit 29 at pages 6-7.
28. 28DM Report dated May 17, 2012, Respondent's Motion Record, Exhibit 29 at page 3.
29. 29Respondent's Motion Record, Tab 27, Exhibit #29.
30. 30Respondent's Motion Record, Tab 17, Exhibit #11.
31. 31Respondent's Motion Record, Tab 18, Exhibit #12.
32. 32WSIAT Hearing Transcript, September 13, 2016 hearing, Respondent's Motion Record, Tab 23, Exhibit #8, pages 39-40.
33. 33WSIAT Hearing Transcript, September 13, 2016 hearing, Respondent's Motion Record, Tab 23, Exhibit #8, pages 42-43
34. 34The WSIAT Hearing Transcript refers to "[business B]" rather than "[business A];" however, it is clear in the transcript that they are referring to [business A] throughout as they use [business B] when discussing the "company known as [business B] or [business A]" and who owns the shares (WSIAT Transcript pages 18-19). Even during this Tribunal hearing, the applicant referred to [business A] as [business B]. An invoice (Respondent's Motion Record, Tab 41, Exhibit #3) has both names [business B] & [business A]. on it. At one point during cross-examination, the applicant indicated that [business A] and [business B] is the same company; however, on May 29, 2018 (Respondent's Motion Record, Tab 4, Exhibit #14), Mr. Duby confirms that [business A] and [business B] are separate legal entities and that [business A] is a corporation fully owned by the applicant's wife and [business B] is a sole proprietorship with the applicant as the sole proprietor.
35. 35WSIAT Decision, Respondent's Motion Record, Tab 25, Exhibit #15 at para 24.
36. 36Norbert J. Boyer and Allstate Insurance Company, FSCO A03-001939, May 30, 2007 at pp. 34-35 as cited in Hua Li Pan and Allstate Insurance Company of Canada, FSCO A16-003705, January 10, 2018 ("Pan v. Allstate") at p. 8
37. 37C.S.Z. v. Allstate Insurance Company of Canada, 2017 CanLII 3144 (ONLAT) at para 84; Schedule, s. 33
38. 38Respondent's Motion Record, Tab 30, Exhibit #16.
39. 39Respondent's Motion Record, Tab 31, Exhibit #17.
40. 40Respondent's Motion Record, Tab 31, Exhibit #17, OCF-9 dated August 29, 2017.
41. 41Respondent's Motion Record, Tab 32, Exhibit #18.
42. 42Respondent's Motion Record, Tab 33, Exhibit #19.
43. 43Respondent's Motion Record, Tab 35, Exhibit #21.
44. 44Respondent's Motion Record, Tab 17, Exhibit #12.
45. 45Respondent's Motion Record, Tab 17, Exhibit #11.
46. 46The 20 cent difference appears to be a calculation error.
47. 47The applicant only indicated that he thinks his wife created it.
48. 48Liberty Mutual Insurance Company v. Morabito, FSCO Appeal P-03-00008, October 8, 2004 at page 5
49. 49Exhibit #16
50. 50Exhibit #17
51. 51Exhibit #19
52. 52Respondent's Motion Record, Tab 27, Exhibit #29.
53. 53At some time, the applicant provided the 2011 corporate tax return for [business A]. No evidence was entered at the hearing as to the date [business A]'s 2011 corporate tax return was provided to the respondent; however, by May 2018 DM was in possession of the [business A]'s 2011 corporate tax return (Respondent's Motion Record Tab 39, Exhibit #39).
54. 54Respondent's Motion Record, Tab 38, Exhibit #23.
55. 55Respondent's Motion Record, Tab 39, Exhibit #39. In the Exhibit, DM refers to and defines [business A] as [business B].
56. 56Respondent's Motion Record, Tab 44, Exhibit #26.
57. 57Respondent's Motion Record, Tab 45, Exhibit #27.
58. 58Respondent's Motion Record, Tab 40, Exhibit #24.
59. 59Respondent's Motion Record, Tab 30, Exhibit #16.
60. 60Respondent's Motion Record, Tab 46, Exhibit #28.
61. 61Applicant's Closing Submissions page 7.
62. 62Respondent's Motion Record, Tab 52, Exhibit #14.
63. 63The Surveillance Report notes, however, that the applicant was not observed on October 3, 2015.
64. 64Respondent's Motion Record, Tab 40, Exhibit #30.
65. 65Respondent's Motion Record, Tab 50, Exhibit #31.
66. 66Respondent's Motion Record, Tab 51, Exhibit #32.
67. 67Pan v. Allstate at p. 14
68. 68Respondent's Motion Record, Tab 43, Exhibit #25.
69. 69Pan v. Allstate at p. 15
70. 70Respondent's Motion Record, Tab 11, Exhibit #7.
71. 71Respondent's Motion Record, Tab 16, Exhibit #9.
72. 72Rule 19.1, Common Rules of Practice & Procedure, Licence Appeal Tribunal, Animal Care Review Board, Fire Safety Commission, October 2, 2017 (the "Common Rules").