Licence Appeal Tribunal
Tribunal File Number: 18-011646/AABS
In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, R.S.O. 1990, c. I.8., in relation to statutory accident benefits.
Between:
K.D.
Applicant
and
Aviva Insurance Company
Respondent
DECISION
ADJUDICATOR: Avril A. Farlam, Vice Chair
APPEARANCES:
For the Applicant: Allan Cocunato, Counsel
For the Respondent: Kevin H. Griffiths, Counsel
HEARD In Writing: September 30, 2019
OVERVIEW
1The applicant, [K.D.] ("applicant") was involved in an automobile accident on October 10, 2017. The applicant sought income replacement benefits ("IRB") from the respondent, Aviva Insurance Company ("respondent"). The respondent agreed the applicant qualified for IRB but the parties disagreed on the quantum of the IRB.
2The applicant applied to the Licence Appeal Tribunal – Automobile Accident Benefits Service pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 20101 ("Schedule") for resolution of this dispute.
ISSUES TO BE DECIDED
3The issues to be decided are:
i. What is the amount of weekly income replacement benefit that the applicant is entitled to receive for the period October 17, 2017 to date and ongoing?
ii. Is the applicant entitled to interest on any overdue payment of benefits?
RESULT
4I find that the amount of IRB the applicant is entitled to is nil. No interest is payable.
POSITIONS OF THE PARTIES
5It is common ground between the parties that the applicant is entitled to IRB. Quantum is in dispute.
6The applicant submits he did not work in 2016. He submits he became self-employed several months prior to the accident in 2017 as the proprietor of a cleaning business called [a cleaning company] and declared $38,400.00 income on his 2017 income tax return. No affidavit evidence was submitted by the applicant at this hearing.
7The applicant submits his IRB would be nil if based upon his 2016 earnings. However, if based on his 2017 earnings, it would be $400.00 per week as calculated by his accountants. The applicant asks that the Tribunal order his IRB to be calculated based on his earnings in the 52 weeks pre-accident.
8The respondent submits that the applicant was self-employed at the date of the accident and has been since 2010. Therefore the calculation of his IRB must be based on his income or loss from the business for the last completed taxation year which was 2016. Since he had no declared income in 2016, the IRB amount is nil.
LAW AND ANALYSIS
9Section 5(1)2 of the Schedule provides that an insured person can be eligible for IRB if they were self-employed at the time of the accident and they suffer, as a result of and within 104 weeks after the accident, a substantial inability to perform the essential tasks of their self-employment.
10Section 4(3) of the Schedule outlines how IRB is calculated if the claimant was a self-employed person at the time of the accident. Section 4(3) provides that IRB is calculated on income from the most recent completed taxation year. This section provides that the weekly income or loss from self-employment at the time of the accident is 1/52 of the amount of the person's income or loss from the business for the last completed taxation year.
11The onus is on the applicant to prove entitlement to IRB on a balance of probabilities.
What was the applicant's pre-accident employment status?
12I find that the applicant was self-employed at the time of the accident.
13Although the applicant submits that he did not work in 2016, the evidence does not support the submission that he was not self-employed at that time. The evidence before me is that the applicant has been self-employed since 2010. This information is contained in two accounting reports obtained by the applicant and submitted to the respondent in support of the request for IRB. The report from RSM Consulting LP dated October 17, 2018 states that the applicant was a self-employed owner/operator of [a cleaning company] since 2010. The report from Martin, Driscoll & Damico Ltd. dated March 22, 2019 also states that the applicant was self-employed as the owner/operator of [a cleaning company] at the date of loss and had been since 2010. These accounting reports corroborate the statements of each other and are the only evidence I have on the name, ownership and dates of operation of the applicant's business. The applicant did not put forward an affidavit at the hearing.
14The only other documentary evidence filed by the applicant was his 2017 income tax return which reports gross business income of $38,400.00, net business income of $38,400.00 and CPP contributions on "self-empl and other earn." The applicant appears to be a sole proprietor of his business and there is no evidence before me that the fiscal year of his business is different than the calendar year.
How is the applicant's IRB claim to be quantified?
15Given that the applicant was self-employed at the time of the accident, I find that the applicant is subject to s. 4(3) because the applicant's gross annual income is based entirely on self-employment. Therefore, the applicant's gross self-employment income is calculated according to the income declared in his last completed taxation year before the accident. The last taxation year before the accident was 2016 and no self-employment income was declared for the 2016 taxation year according to the applicant's 2016 tax return.
16The two accounting reports filed by the applicant incorrectly calculate the applicant's IRB based on weekly earnings for the last 52 weeks before the accident. This incorrectly increases the base weekly IRB to $400.00 per week. The applicant has not satisfied the evidentiary burden to prove his claim to IRB in this amount or any amount other than nil dollars as a result of the incorrect calculation put forward through his accountants.
17The applicant's submission that he should be allowed to calculate his pre-accident income based on the 52 weeks pre-accident is not persuasive. This argument is based on a misinterpretation of s. 4(2) as has been explained by the Tribunal before. Although not binding on me, I agree with the interpretation of Adjudicator Norris2 where he stated:
"...although section 4(2) applies to self-employed persons, the reference to qualifying under section 5(1) means section 4(2) is only applicable where the self-employed person was also employed or recently employed in the time preceding the accident. This was reiterated in LAT decision 17-002366/AABS where the claimant was self-employed and employed on a part-time basis, thus allowing the claimant to choose between calculating IRB based on the most recent 52 weeks and the last fiscal year."
18The applicant's submission that the OCF-2, which allows the insured to select the last 52 weeks or last complete fiscal year if self-employed, gives the applicant the right to calculate the IRB other than as provided for in s. 4(3) is also not persuasive. The entitlement to IRB and the method of calculation is prescribed by the Schedule. The OCF-2 does not grant any substantive or procedural right to the applicant at odds with the legislation.
19The applicant's submissions that to apply s. 4(3) would create an unjust result, will create an "unintentional blind spot" and possibly other perceived unfairness to the applicant is also not persuasive. Section 4(3) of the Schedule is clear and unambiguous. The applicant has not brought forward any evidence to establish he started his self-employment after 2016. The evidence from the applicant's own accountants is to the contrary. The evidence is clear that the applicant has been self-employed since 2010 and did not declare any income in 2016 and those are the facts that have determined the result of this hearing.
20For the reasons set out above, I find that the amount of IRB the applicant is entitled to is nil.
Interest
21As no benefits are payable, no interest is payable.
ORDER
22For the reasons outlined above, I find that the amount of IRB the applicant is entitled to is nil.
Released: March 31, 2020
Avril A. Farlam
Vice Chair
Footnotes
- O.Reg. 34/10
- V.H. v. Aviva Insurance Company of Canada, 2019 CanLII 130385 (ON LAT), para 13.