Degroot v. Security National Insurance Company, 2021 CanLII 30277

Citation: Degroot v. Security National Insurance Company, 2021 ONLAT 20-005980/AABS

Release date: 03/26/2021

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:

Byrnell Degroot

Applicant

and

Security National Insurance Company

Respondent

DECISION

ADJUDICATOR:

Robert Watt

APPEARANCES:

For the Applicant:

Gus Triantafillopoulos

For the Respondent:

Joseph Hogan Counsel

HEARD:

By way of written submissions and videoconference

OVERVIEW

1The applicant was injured in an accident on November 12, 2017 and sought an income replacement benefit (IRB) from the respondent, Security National Insurance Company (“Insurer”), pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010¹ (''Schedule''). The Insurer denied the benefit in dispute on the basis that the applicant did not provide the necessary information to properly calculate the IRB quantum under the Schedule. The applicant disagreed and submitted an application to the Tribunal for resolution of the dispute.

ISSUES IN DISPUTE

2The following issues are in dispute:

1. Is the applicant entitled to an income replacement benefit (IRB) from November 19, 2017 to date, and ongoing, and if so, in what amount?

2. Is the respondent liable to pay an award under s. 10 of O. Reg. 664 because it unreasonably withheld or delayed payments to the applicant?

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

result

3The applicant is entitled to an IRB to October 6, 2020 in the amount of $32,488.04, as calculated by the Lynch & Associates Report dated September 28, 2020 and thereafter, once the amount has been calculated.

4The applicant is not entitled to an award or costs.

5The applicant is entitled to interest on overdue amounts pursuant to s. 51 in the amount of $5,023.71, as calculated by the Lynch & Associates Report dated September 28, 2020.

Written Motion at Hearing

6The respondent brought a written motion to be heard on January 18, 2021 at the videoconference hearing. The motion was dated January 8, 2021 and was for an order admitting the Preliminary Report of Zainab Walji of PricewaterhouseCoopers LLP (PWC) dated December 31, 2020, and to allow Zainab Walji to be cross-examined by the applicant at the hearing. The report was delivered to the applicant on January 6, 2021.

7The applicant opposed the motion on the basis that it did not comply with the Tribunal’s Common Rules of Practice and Procedure (“LAT Rules”) and the applicant would be prejudiced by receiving motion materials at such a late date. If the report was allowed in, the applicant would require additional productions from the respondent, which would cause a significant delay in the hearing.

8LAT Rule 15 requires motions to be served at least ten days prior to a hearing on the motion and Rule 10 requires expert reports to be served at least twenty days before the hearing. Rule 9.4 of the LAT Rules states very clearly, “if a party fails to comply with any Rules, directions or orders with respect to disclosure or inspection of documents or things, or list of witnesses, that party may not rely on the document or thing as evidence, or call the witnesses to give evidence, without the consent of the Tribunal.”

9LAT Rule 3.1(b) also requires that the Rules be interpreted liberally to provide efficient, proportional, and timely resolution of the merits of the proceedings before the Tribunal.

10Adjudicator Msosa’s Case Conference Report and Order, issued on October 7, 2020, required the respondent’s submissions and evidence to be given to the applicant by December 31, 2020.

11The respondent failed to comply with the LAT Rules and the order of Adjudicator Msosa, without providing any reasonable explanation for the lateness of the report. The respondent made no request for any extension of time to obtain a report from PWC. The respondent did not request a preliminary calculation based on the 2016 to 2018 Notices of Assessments until December 23, 2020. The respondent’s explanation was that when it received the reports from its experts, the respondent forwarded them immediately to the applicant.

12I allowed the principal report in, as I find that it is relevant and set out the respondent’s calculations of the IRB quantum. It was my position that the case would be heard on the merits, if the report were allowed in. Excluding the report would impair the Tribunal’s ability to ensure a fair and proportional determination of the merits of the case, which Rule 3 requires. Rule 9.4 also permits the Tribunal to allow the evidence in, that might otherwise be excluded, when determining whether documents should be included or excluded.

13I did give the applicant the option to adjourn the hearing, and I would award costs against the respondent in the amount of $500.00, if adjourned. The applicant decided not to proceed with this option.

Oral Motion at Hearing

14The respondent also made an oral motion at the hearing for an order allowing a supplementary report by PWC dated January 14, 2021, to be put into evidence. I reserved my decision on this motion.

15The respondent again has not adhered to the LAT Rules. It is up to the parties to make sure that their documents, including expert reports, are acquired and served on the other party within the timelines agreed to, and within the requirements of the LAT Rules. Any failure to make proper disclosure, as required, interferes with the Tribunal’s ability to decide the issues and the other party’s right to make full and fair submissions. The applicant had no time to respond to the supplementary report and would therefore be prejudiced by the later filing of the report. Any adjournment of the hearing would prejudice the applicant from having his issues determined within a reasonable time frame.

16Directions from the Tribunal and the LAT Rules should be followed. When they are not, without sufficient reason, there should be consequences. For the reasons set out above, I am granting the relief sought by the applicant and not allowing the supplementary report in as evidence. Pursuant to Rule 9.4, the respondent may not rely on the supplementary report as evidence and I did not consider it.

BACKGROUND

17The applicant is self-employed and also in a family business that he owns 50% of with his brother. The applicant derives his income from renting out equipment, equipment operations and supplying construction materials. The applicant files his personal income tax returns and corporate tax returns for the family business. After the accident, the applicant had to hire his father and another man to assist him in the business.

18The applicant’s wife advised the respondent on December 15, 2017 that the applicant was unable to work.² On February 1, 2018, a Disability Certificate (OCF-3) dated December 21, 2017 was submitted on behalf of the applicant, indicating that the applicant could return to work on modified duties.

19The applicant called the respondent on February 8, 2018 and advised the respondent that he was off work for two weeks and tried to go back to work but was unable to work.³

20The applicant called the respondent on April 18, 2018 indicating that he was still unable to work and that he was living off his life savings.⁴ On May 14, 2018, the applicant’s family doctor, Dr. Koprowicz, submitted an OCF-3 which indicated that the applicant was substantially unable to perform the essential tasks of his employment.⁵ Included with the OCF-3 was the applicant’s 2016 Tax Assessment. The applicant left a message with the respondent on April 19, 2018 that he was unable to work due to his pain.

21By written letter dated May 30, 2018, the respondent accepted the applicant’s eligibility for an IRB based on the OCF-3 of Dr. Koprowicz. The respondent indicated that it was referring the calculation to their accounting firm PWC.⁶ The respondent referred the file to PWC on May 30, 2018 for calculation of the IRB. PWC closed the referral file on March 26, 2019. Apparently, the respondent had not followed up with PWC for a preliminary report.

ANALYSIS

Issue 1: Is the applicant entitled to an IRB from November 19, 2017 to date, and ongoing, and if so, in what amount?

22In order to receive an IRB, the insured must show that he sustained an impairment as a result of an accident, that he was employed at the time of the accident and, as a result of and within 104 weeks after the accident, that he suffers a substantial inability to perform the essential tasks of that employment. After the first 104 weeks, the insured must show a complete inability to engage in any employment or self employment for which he is reasonably suited by education.

23Entitlement is not at issue here, as the Respondent conceded by letter on May 30, 2018 that the applicant was entitled to an IRB. Camille Clyne, adjuster, testifying on behalf of the respondent on January 18, 2021, indicated that the respondent under section 36(4)(a) of the Schedule elected to pay the IRB.⁷ Ms. Clyne also admitted in her evidence that no request under section 36(4)(b) was made for a section 44 examination nor was a section 33(1)(2) request for more information ever made by the respondent.

24Ms. Clyne also admitted that the respondent owed a minimum of $185.00 per week to the applicant at 104 weeks post accident, and that it was an error to not pay it. From the 104-week mark, being November 12, 2019, she admitted that “it might have been better to pay Mr. DeGroot an IRB of $185.00 per week rather than receiving zero dollars per week since that time.”⁸ The respondent never advised the applicant that he did not suffer a substantial or a complete inability to go back to work.

25There is a dispute between the parties as to the information required by PWC and the documentation provided by the applicant to assist PWC with the calculations for the IRB quantum. The applicant’s position is that it provided to the respondent all of the information it asked for. On June 24, 2020, PWC indicated to the applicant that it did not have certain financial productions it needed. This letter was in contradiction to the adjuster’s log notes which showed it had all of the financial information needed. The applicant was advised that the former adjuster on the file was not a good record keeper.⁹ The applicant submitted five CDs of financial information to the respondent.

26The respondent requested corporate returns from the applicant in mid-2020 but took no steps to acquire them. However, the applicant had an Income Replacement Benefit Calculation Report completed by Jennifer Lynch & Associates dated September 28, 2020. This report was forwarded to the respondent on October 6, 2020. That report had been based on financial documentation supplied by the applicant, which included the applicant’s Notices of Assessment for years 2016 to 2018, and the applicant’s corporate returns (2232420 Ontario Ltd.) for 2017 and 18. The report also relied on the corporation’s payroll deductions for the years 2016 to 2018.

27The respondent’s position for not paying the IRB was that it needed more financial information because the applicant also had a corporation. The respondent’s own witness from PWC, Ian Gesnik, gave evidence that PWC was requesting more information than the CRA requires to be produced when filing tax returns.¹⁰ Zainab Walji from PWC also admitted in her evidence that any calculation did not need to be 100% accurate and that any calculation could be later amended and a repayment sought.¹¹ Section 52 of the Schedule provides for the repayment process.

28Section 4(3) of the Schedule sets out the calculations for an IRB for a self-employed person. The amount upon which IRB is calculated is the same as the amount reported to CRA.¹² This Tribunal has already stated that the plain language of section 4(3) of the Schedule makes clear that the amount accepted by the CRA is to be used when determining pre-accident income for self-employment income.¹³

29I find that the respondent had all of the required financial information to calculate an IRB, even on a preliminary basis, as required under section 4(3) of the Schedule, taking into account both personal and corporate information already received from the applicant. The respondent never made any section 33 requests for more financial information from the applicant nor did it bring a motion to the Tribunal for further productions.

30I accept the applicant’s evidence that he had provided all of the financial documentation requested and that any other financial information asked for by the respondent was not necessary to calculate a preliminary amount to be paid for an IRB. I find that the respondent’s request for more documents was excessive and not reasonably required in order to calculate the weekly quantum of IRBs and that this resulted in an unreasonable delay of payment of the IRB.

AMOUNT OF IRB

31For the year 2017, the applicant and respondent agree that, based on the findings of the Lynch & Associates Report dated September 21, 2020 and the preliminary Report of PWC dated December 31, 2020, there are no amounts owing for IRB.

32For the year 2018, both the applicant and respondent agree that the amount in PWC’s preliminary report is accurate. The applicant is therefore entitled to $161.44 per week, which in total equals $8,417.94, plus interest under s. 51, for the year.

33For the year 2019, there is no calculation by PWC despite having the applicant’s 2019 tax assessment. Lynch & Associates calculated the IRB owing from January 1, 2019 to November 11, 2019 based on $163.11 per week as $7,264.80, plus interest.

34As this is the only evidence before me, I accept the calculations set out in the Lynch & Associates report and find that the applicant is entitled to an IRB in the amount of $163.11 per week for the period January 1, 2019 to November 11, 2019, plus interest.

POST-104 Benefits

35There is no dispute on entitlement but only to the amount owed. The post-104 period begins on November 12, 2019. Section 7(2) of the Schedule sets out the quantum calculation as the greater of the amount calculated and $185.00 per week.

36The Lynch & Associates report, being the only report with calculations provided, calculates the IRB as $161.44 per week, which is lower than the $185.00 per week, for the period from November 12, 2019 to December 31, 2019. The amount calculated as owed is $1,295.00 plus interest.

37The Lynch & Associates report calculates the total IRBs owing from November 12, 2017 (being the date of loss) to October 6, 2020, as being $32,488.04, plus interest under s. 51 in the amount of $5,023.71, for a total of $37,511.75.

38As those are the only calculations before me, I accept those calculations as being the correct calculations.

39There are no other calculations for the period following October 6, 2020. I cannot therefore make any order to cover that period. Hopefully the parties will exchange the appropriate financial data and other information required to arrive at IRB payments, after October 6, 2020.

AWARD

40The applicant also sought an award under s. 10 of O. Reg. 664, submitting that the IRB should have been paid. The applicant’s position is that the respondent had the applicant’s corporate tax returns for 2016, 2017 and 2018, as well as his personal Notices of Assessment for 2018 and 2019. The respondent’s position is that it did not have enough information to make the calculations. Under s. 10, the Tribunal may award up to 50% of the total benefits payable if it determines that the insurer unreasonably withheld or delayed the payment of benefits. The respondent admitted that it did nothing to move the file along with PWC.¹⁴

41The Tribunal has stated that the definition of unreasonable behaviour by an insurer in withholding or delaying payments can be seen as “unreasonable behaviour, which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate”.¹⁵

42The respondent in this case was relying on its expert witness PWC to calculate the amount of the IRB to be paid. PWC continued to maintain right up to the hearing that it did not have the requisite information for calculating the IRB amount. Even though PWC was requesting more information than CRA and was wrong in its position, this does not meet the criteria or making an award. I am therefore not ordering any award.

INTEREST

43Interest is to be paid in accordance with section 51 of the Schedule in the amount of $5,023.71, as calculated by the Lynch & Associates Report, dated September 28, 2020.

COSTS

44Section 19.1 of the LAT Rules allows the Tribunal to order costs, if a party has acted, unreasonably, vexatiously, or in bad faith.

45The applicant is asking for his costs, on the grounds that the respondent missed the deadlines for submitting its preliminary report and supplementary report and filed them late. The respondent received the reports late from the expert witness. The respondent was already penalized under Rule 9 of the LAT Rules as set out above, by having some of the evidence excluded from the hearing. The respondent in not adhering to the Rules and the previous order for the filing of documents, does not meet the standard required under Rule 19. Rule 9 addresses these issues. I am therefore making no order as to costs.

CONCLUSION

46Based on the above reasons, the applicant is entitled to an IRB to October 6, 2020 in the amount to $32,488.04 and interest in the amount of $5,023.71. The applicant is not entitled to an award or to costs.

Footnotes

1. 1Lat Rules, Rule 15
2. 2Tab 1 of Applicant’s Written Submissions, Log note, p. 23.
3. 3Ibid, at p. 21.
4. 4Ibid, at p. 20.
5. 5Tab 4 of Applicant’s Written Submissions.
6. 6Tab 5 of the Applicant’s Written Submissions.
7. 7Transcript, January 18, 2021, p. 59, at 13-18, 2-10.
8. 8Transcript, January 18, 2021, p. 63.
9. 9Tab 9 of the Applicant’s Written Submissions
10. 10Transcript, p. 40, lines 15-25; p. 41, lines 1-2
11. 11Transcript, p. 9, lines L3010
12. 12N.Z. v. Economical Insurance, 2020 CanLII 63563 (ON LAT)
13. 13F.F. v Aviva Canada, 2017 CanLII 77381 (ON LAT) at para. 29 and N.Z. v. Economical Insurance, 2020 CanLII 635863 (ON LAT)
14. 14Transcript, p. 89.
15. 1517-006757/AABS v. Aviva Insurance Canada, 2018 CanLII 81949 (ON LAT), at 28.