T.S. v. Aviva Insurance Canada, 2020 CanLII 34431

Citation: T.S. vs. Aviva Insurance Canada, 2020 ONLAT 18-002858/AABS

Tribunal File Number: 18-002858/AABS

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:

T.S.

Applicant

and

Aviva Insurance Canada

Respondent

DECISION

PANEL:

Jesse A. Boyce, Adjudicator

APPEARANCES:

For the Applicant:

Dinesh Shan

For the Respondent:

Catherine Zingg

HEARD:

Via Written Submissions

OVERVIEW

1T.S. was injured in an accident on October 28, 2017 and sought benefits, including an income replacement benefit (“IRB”), from the respondent, Aviva, pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (“Schedule”). The parties disagreed over the IRB calculation and T.S. applied to the Licence Appeal Tribunal – Automobile Accident Benefits Service (Tribunal) for resolution of the dispute.

ISSUES TO BE DECIDED

2The following are the issues in dispute:

a. Is the applicant entitled to receive an IRB in the amount of $284.37 per week for the period February 27, 2018 to date and ongoing? If so, what is the amount of weekly IRB that the applicant is entitled to receive?

b. Is the applicant entitled to interest on any overdue payment of benefits?

c. Is the applicant entitled to an award under Ontario Regulation 664 because the respondent unreasonably withheld or delayed the payment of benefits?

RESULT

3I find T.S. is not entitled to payment for an IRB in the amount of $284.37 per week for the period in dispute or interest. I decline to order an award and costs.

ANALYSIS

Is T.S. entitled to an income replacement benefit in the amount of $284.37?

4Entitlement to an IRB falls under s. 5(1)1(i) of the Schedule: an IRB is payable if the insured was working at the time of the accident and, within 104 weeks of the accident, suffers a substantial inability to perform the essential tasks of that employment. This inquiry is divided into two steps: 1) what are the essential tasks of employment; and, 2) is the insured substantially unable to perform the essential tasks of that employment? The onus to prove entitlement rests with the applicant.

5T.S. submits that, at the time of the accident, he worked as a self-employed graphic designer, as a service agent at [the Car Rental Company] and as a rental agent at [the Car Dealership Company]. He alleges that the injuries he sustained in the accident—identified as recurring pain in his neck, back and shoulder, anxiety, insomnia and psychological impairments—prevented him from working and that he suffered income loss as a result. He submits that his jobs at [the Car Dealership Company] and [the Car Rental Company] involved prolonged standing, walking, bending and lifting. T.S. asserts that he became unable to return to work after the accident, and that this was due to functional limitation caused by his accident-related pain and injuries. In his submissions, T.S. provides a timeline of his application and correspondence with Aviva to support his argument that Aviva has consistently mishandled his claim, further arguing that it failed to correctly calculate his IRB.

6Based on this timeline, which is not specifically disputed by Aviva, on July 18, 2018 Aviva provided T.S. an IRB cheque in the amount of $4,534.00. This cheque represented payment for IRBs owing in the weekly amount of $161.94 for the period of October 28, 2017 to May 9, 2018, the date of termination. In addition, interest in the amount of $207.93 was included. T.S.’s IRB was terminated on the basis of s. 44 multi-disciplinary assessments that took place in April 2018 and which ultimately determined there was no evidence of a functional impairment that would substantially prevent T.S. from completing his pre-accident works tasks. Based on his submissions, T.S. does not seem to take issue with the termination. Indeed, he states that the denial is not in issue and that the opinions of the assessors are irrelevant to this proceeding.

7As I understand it, the issue identified as being in dispute does not accurately capture T.S.’s argument. Rather, the underlying reasons for T.S.’s application are two-fold: first, that Aviva did not take into account all of his pre-accident employment in calculating his weekly IRB, specifically that it did not accept that he received income as a self-employed graphic designer and as a sales rep with [the Car Dealership Company], which would bring the IRB amount to $284.37 per week; second, that Aviva failed to respond to his IRB application within 10 days and numerous correspondence thereafter and, as a result, that Aviva should be required to pay the IRB claim at the full amount for the period in dispute because it took 29 days to respond to his IRB application and it only paid partial IRB in July 2018 despite repeated requests to pay.

T.S.’s self-employment and employment at [the Car Dealership Company]

8T.S. submits that Aviva should have considered his income from self-employment and his four weeks of pre-accident work at [the Car Dealership Company] when calculating his IRB payment. To this end, he relies on the accounting report of S&T Accounting, which used the OCF-2 from [the Car Dealership Company] in its calculation. T.S. submits that “even though [Aviva] decided not to take into account his self-employment work, they have made calculations based on 52 weeks rather than 4 weeks.” T.S. asserts that Aviva “should have made the calculations of his income to be made based on his gross employment income for the four weeks before the accident” and cites s. 4(2) of the Schedule.

9In response, Aviva relies on s. 4(5) of the Schedule to support its argument that, because T.S. has not reported income from either self-employment or from [the Car Dealership Company], his income for the purposes of IRB calculation shall be determined without reference to any income he failed to report under the Income Tax Act. Specifically, Aviva asserts that because T.S. provided his statements of earnings and deductions with respect to his employment at [the Car Rental Company], Aviva accepted this documentation and the payment of past IRBs was based on his employment at [the Car Rental Company]. T.S. seemingly accepts this determination.

10With regards to his self-employment as a graphic designer, Aviva submits that this income, allegedly received in cash, was not used in the IRB calculation because T.S. did not incorporate the company and did not have an HST number under the Income Tax Act. Further, at his examination under oath, Aviva states that T.S. was unable to recall the number of customers that he had and reported that he only accepted cash by electronic money transfer. To date, Aviva submits that T.S. has not produced a 2017 tax return showing that the income was reported by the graphic design business despite providing an undertaking for the 2017 tax return and Notice of Assessment. Of note, 13 invoices were submitted for 2017 for the graphic design business with the IRB report.

11As it pertains to T.S.’s employment at [the Car Dealership Company], Aviva submits that at the examination under oath, T.S. claimed that he was working 45-to-60 hours per week when he started with the company in September or October 2017. Aviva asserts that T.S. claimed that he earned $3,000.00 total at [the Car Dealership Company] but was unable to recall whether any money that he received from [the Car Dealership Company] was deposited into a bank account or what form of payment was received. At the examination, T.S. allegedly replied that he could not recall how [the Car Dealership Company] even paid him because he was “pretty much on medications all the time, but I’m pretty sure it’s cash.” Further, Aviva submits that, when asked whether he reported income earned from [the Car Dealership Company] to the Canada Revenue Agency on his tax returns, T.S. replied in the negative and gave an undertaking for the 2017 tax return that has not yet been fulfilled. In addition, Aviva asserts that a Record of Employment and a Declaration of Post-Accident Income have not been produced in regard to T.S.’s alleged earnings from [the Car Dealership Company], but acknowledges that the OCF-2 was used by S&T.

12I agree with Aviva. The onus to prove entitlement to IRBs rests with T.S. and I find that he has not met his burden, despite the report of S&T claiming there is sufficient information in an OCF-2. Section 4(5) of the Schedule is clear that, for the purposes of applying for an IRB, a person is required to report the amount of his or her income and, if income is not reported, the IRB is calculated without reference to any income they have failed to report. On the evidence, I find this is precisely what occurred, as Aviva took into consideration all the reported income from [the Car Rental Company] in calculating and paying the IRB, but correctly disregarded the unreported income from T.S.’s self-employment and [the Car Dealership Company], because this income was not reported. An OCF-2 provides confirmation of an employment relationship and an accountant is free to use the figures presented in its calculation. However, an OCF-2 alone does not somehow trump the requirement of s. 4(5) in the absence of a tax return, notice of assessment or pay stub confirming that T.S. paid tax, CPP or EI on his income. In a similar vein, despite providing invoices and personal bank statements allegedly related to his self-employment, the graphic design business is not a registered business, and it remains unclear if T.S. reported this income or paid tax on same in order to satisfy s. 4(5). Finally, while I am alive to T.S.’s argument that IRB calculations should have been made under s. 4(2)1(i), he still has not demonstrated how he overcomes the hurdle for entry under s. 4(5) due to his self-employment income not being recognized under the Income Tax Act. Indeed, his submissions do not address this section at all.

13Against these facts, I find Aviva made proper requests for this information and that T.S. has failed to provide the Tribunal with evidence that he complied with Aviva’s request for undertakings. While I accept that T.S. has missed time from work as a result of his impairments, the Tribunal was not provided with evidence to meet the test required to increase the IRB payment to the amount he claims under the Schedule. Accordingly, I find he is not entitled to IRB payment in the amount of $284.37 as Aviva correctly relied on s. 4(5) of the Schedule in calculating IRB and on proper, uncontroverted s. 44 assessments in terminating same.

Aviva’s late response

14As I understand it, T.S.’s secondary argument is based on Aviva’s failure to respond to his IRB application within 10 days and its failure to respond to numerous correspondence after the application was submitted and after Aviva’s s. 33 requests to produce documentation were, in his view, satisfied. T.S. argues that Aviva should be required to pay the IRB claim pursuant to s. 36(6) at the full amount for the period in dispute, plus interest, because it took Aviva 29 days to respond to his IRB application, in violation of s. 36(4), and Aviva only paid the partial IRB on July 17, 2018 despite repeated requests to pay.

15T.S. submitted his OCF-1 to Aviva on November 15, 2017. T.S. submitted his OCF-3 to Aviva on January 3, 2018. The accounting report from S&T was then submitted and received by Aviva on January 29, 2018, which T.S. argues completed his application for IRB. I agree.

16Thereafter, on February 26, 2018, 28 days after the IRB application was completed, T.S. called Aviva and left a voicemail regarding the status of the IRB payments and sent out an email regarding the status of the IRB. On February 27, 2018, being 29 days after the IRB application was completed, Aviva sent correspondence requesting various financial documents it needed to calculate the IRB. On March 13, 2018, a letter of response was sent by S&T Accounting to Aviva along with the financial documents that it deemed were reasonable. Between this date and the date of the Tribunal application, being April 2, 2018, T.S.’s representative sent numerous emails requesting that the IRB be paid. Following the Tribunal application, T.S. supplied further documentation to Aviva and sent further emails asking that the IRB be paid, which he alleges went unanswered.

17On the evidence, I find Aviva failed to respond to T.S.’s IRB application within 10 days of receipt, as its first correspondence regarding same is dated February 27, 2018, despite T.S.’s application being complete on January 29, 2018. This period of 29 days is clearly in excess of the 10-day period prescribed by s. 36(4). The consequences of breaching s. 36(4) are contained in s. 36(6), which states that if the insurer fails to comply with the mandatory timeline, it shall pay the specified benefit for the period starting on the day the insurer received the application and completed OCF-3 and ending on the day the insurer gives notice. In this vein, T.S. submits that Aviva should be required to pay the IRB amount he claimed pursuant to s. 36(6) at the full amount for the period in dispute.

18However, I find Aviva has already done so. While I am not privy to the discussions between the parties, it appears that Aviva recognized its error and remitted payment for the IRB in the amount of $4,534.00 in July 2018, which is not denied by T.S. This cheque represented payment for IRB owing in the weekly amount of $161.94 for the period October 28, 2017, being the date of loss, to May 9, 2018, the date of termination. Notably, this period encompasses the date of T.S.’s application and the 29-day breach it took Aviva to respond to same as well as the delay in payment between March 2018 and the termination date.

19Contrary to T.S.’s submissions, Aviva’s delay in complying with s. 36(4) does not automatically entitle T.S. to payment under s. 36(6) for IRBs over and above what he is entitled to. Put simply: T.S. is not entitled to a windfall. Aviva is not liable to pay T.S. an extra $122.36 per week for the entire period, based on his IRB calculation, simply because Aviva breached its procedural obligations under s. 36.

20A specified benefit is only payable for the period when the insurer is in breach and an insured cannot receive greater payment than what he is entitled to receive as a result of that breach. Had Aviva not paid the IRB owing in full in July 2018, I agree with T.S. that Aviva would be required to pay the IRB for the 29-day period it was in breach, but that payment would still not be based on unreported income. In any event, I find Aviva cured its breach on February 27, 2018 by responding and then remitted payment that covered the entire period in dispute in July 2018, which satisfied the requirement of s. 36(6).

Award, Costs and Interest

21T.S. alleges unconscionable, bad faith behaviour on the part of Aviva. He submits that his entitlement to IRBs was calculated at the amount of $284.37 and Aviva refused to accept his self-employment income and income from [the Car Dealership Company], in its calculation. He submits that, due to Aviva’s lack of response to his IRB application, he was forced to apply to the Tribunal. He states that his representative made numerous requests to commence the IRB payments, but Aviva failed to respond. In addition to full payment of the IRB, T.S. seeks an award under s. 10 of O. Reg. 664 for payments that were unreasonably withheld and delayed. Lastly, T.S. seeks his costs under Rule 19 of the Tribunal’s Common Rules of Practice and Procedure due to Aviva’s “unconscionable behaviour” and bad faith adjusting.

22Under s. 10 of O. Reg. 664, the Tribunal may award up to 50% of the total benefits in dispute if it determines that the insurer unreasonably withheld or delayed the payment of benefits. Under Rule 19, the Tribunal may award costs where a party in a proceeding acted unreasonably, frivolously, vexatiously or in bad faith. On the facts and evidence, I find an award and costs are not appropriate.

23First, having determined that no benefits are payable in this application, it follows that the Tribunal cannot award up to 50% of zero. Second, even if benefits were payable, I find Aviva cured its s. 36 breach by remitting payment in July 2018 in full for the IRB for the period in dispute with interest and relied on s. 44 assessments in terminating the benefit. Third, while the 29-day delay between T.S.’s application and Aviva’s response was contrary to the Schedule, on review of the log notes and correspondence, I do not find Aviva acted unreasonably or in bad faith in requesting the documentation it did or in adjusting the file to ensure the IRB calculation was correct. I find this is especially so given the irregularities present in T.S.’s IRB claim and his responses to same. I agree with Aviva that this was an appropriate case in which to request productions for proof of income.

24As it pertains to T.S.’s costs request, I find no evidence to support his contention that Aviva acted unreasonably, frivolously, vexatiously or in bad faith during this proceeding to warrant a costs award.

25As no benefits are overdue, it follows that interest does not apply.

CONCLUSION

26For these reasons, I find T.S. is not entitled to payment for IRB in the amount of $284.37 per week, interest on same, an award or costs.

Footnotes

1. 1O. Reg. 34/10.```