Huang v. The Dominion of Canada General Insurance Company, 2022 CanLII 14926

Citation: Huang v. The Dominion of Canada General Insurance Company, 2022 ONLAT 19-006264/AABS

Licence Appeal Tribunal File Number: 19-006264/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:

Guan Mei Huang

Applicant

and

The Dominion of Canada General Insurance Company

Respondent

DECISION

ADJUDICATOR: Stephanie Kepman

APPEARANCES:

For the Applicant: Yu Jiang, Paralegal

For the Respondent: Sara Baum, Counsel

HEARD: By way of written hearing

REASONS FOR DECISION

BACKGROUND

1The applicant was involved in an automobile accident on September 10, 2018, and sought benefits pursuant to the Statutory Accident Benefits Schedule Effective September 1, 2010 (including amendments effective June 1, 2016)¹. The applicant was denied certain benefits by the respondent and submitted an application to the Licence Appeal Tribunal - Automobile Accident Benefits Service ("Tribunal").

ISSUES

2On consent, the following issues are to be decided by the Tribunal:

i. Is the applicant entitled to receive an income replacement benefit in the amount of $400.00 per week for the period of September 17, 2018, to date and on-going?

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

3The parties agree that prior to the applicant's accident, she was self-employed, as the owner of a restaurant. The parties do not dispute that her injuries are as a result of the accident.

4The parties also agree that the issue in dispute relates to calculating the applicant's quantum of income replacement benefit ('IRB').

5The parties participated in a first Case Conference on November 7, 2019, where they agreed to an in-person hearing. On April 27, 2020, that hearing was cancelled due to the on-going Covid-19 pandemic.

6The respondent hired Binder Dijker Otte Accounting ('BDO') to calculate the applicant's IRB quantum. However, BDO requested further documentation from the applicant in order to do so².

7When the applicant refused to do so, the respondent filed a Notice of Motion³ to request financial documents from the applicant related to her IRB claim. This Motion was heard on June 12, 2020, where Adjudicator Makhamra⁴ ordered the applicant to produce:

i. Complete copies of Ms. Huang's 2019 personal income tax return, including all supporting schedules and attachments thereto, and of the related Canada Revenue Agency ("CRA") Notice of Assessment, when available;

ii. Copies of the financial statements, T2 Corporation Income Tax Returns, including all supporting schedules and attachments thereto, and the related CRA Corporation Notices of Assessment in respect of Ms. Huang's self-employment, 2500520 Ontario Inc. for the last fiscal year completed prior to the accident and for any fiscal years completed since the accident;

iii. Copies of the Goods and Services Tax / Harmonized Sales Tax Returns in respect of Ms. Huang's self-employment for the period September 1, 2017 to as up-to-date as possible, including evidence of payment of any balances reported as owing, or receipt of refunds claimed;

iv. Details and supporting documentation of any wages paid to those individuals replacing or assisting Ms. Huang in her self-employment, including copies (front and back) of the cancelled cheques made payable to these individuals and the dates and hours worked for the period September 10, 2018 to as up to-date as possible, or confirmation that there are none;

v. Confirmation as to whether Ms. Huang has returned to work subsequent to the accident and, if so, please provide details as to the capacity and on what date(s) she returned to work; and

vi. Details and supporting documentation with regards to any other income from employment/self-employment earned or any Employment Insurance of Canada Emergency Response benefits Ms. Huang received during the period January 1, 2020 to as up to date as possible.

8The applicant submitted her 2019 Personal Income Tax Return, Notice of Assessment, T2 Corporate Income Tax Return and Notice of Assessment⁵. However, the applicant did not produce her T2 Corporate Income Tax Return and Notice of Assessment for 2017 or 2018.

9Based on the documentation received, BDO calculated the following⁶ related to the applicant's quantum for IRB entitlement:

"September 18, 2018 to December 31, 2018 – Unknown – The claimant's business continued to operate but the results of same are not known.

January 1, 2019 to December 31, 2019 - $0 per week – The claimant's business continued to operate, and the operating results are known".

LAW

10Section 4(3) of the Schedule states that when considering a self-employed person's income or loss from self-employment at the time of the accident, the amount would be 1/52 of the amount of the person's income or loss from the business for the last, completed tax year in accordance with Part I of the Income Tax Act, RSC 1985, c 1 (5th Supp) (the 'Income Tax Act').

11Section 4(4) of the Schedule states a self-employed person's loss from self-employment after an accident is determined in the same way as losses from the business where the person was self-employed is determined under section 9(2) of the Income Tax Act without deductions for expenses that were not reasonable or necessary to prevent loss of revenue, any salary expenses paid to replace the self-employed person's active participation, except those that are reasonable in the circumstances and any non-salary expenses that are different in nature or greater that the non-salary expenses incurred prior to the accident, except expenses that are reasonable in the circumstances and necessary to prevent or reduce any losses resulting from the accident.

12Section 7(1) of the Schedule states that the weekly amount of IRB paid to an insured person who becomes entitled to such before his/her/their 65th birthday is the lesser of the weekly base amount determined under section 7(2), less the total of all other income placement assistance, if any, for the particular week the benefit is payable, and $400.00.

13Section 7(2) of the Schedule states that for the purposes of section 7(1), the weekly base amount of an insured person is determined by first determining if the injured person is entitled to either 70% of the amount by which the sum of the insured person's gross weekly employment income and weekly income from self-employment exceeds the amount of the insured person's weekly loss from self-employment, if the weekly IRB is for the first 104 weeks of disability or the greater amount of determined between subparagraph i and $185.00, if the IRB is after the first 104 weeks of disability.

14Section 7(3)(b) of the Schedule states than an insurer may deduct from the amount of IRB payable to an insured person and 70% of any income from self-employment earned by the insured person after the accident and during the period in which he/she/they is eligible to receive an IRB.

EVIDENCE & Submissions

Income Replacement Benefit Quantum

15After considering the evidence and submissions of the parties, based on a balance of probabilities, I find that the applicant's IRB quantum is $0.00 for the disputed periods for the following reasons:

i. The applicant submitted that she has provided sufficient information for the respondent to calculate her IRB quantum. She submitted that she has provided the following documents, which ought to be sufficient for the respondent:

1. Employer's Confirmation Form (OCF-2) dated December 12, 2018;
2. Disability Certificate (OCF-3) dated March 11, 2019;
3. Disability Certificate (OCF-3) dated October 3, 2019;
4. 2017 Notice of Assessment;
5. 2017 T1 General;
6. 2018 Notice of Assessment;
7. 2018 T1 General;
8. 2019 Notice of Assessment;
9. 2019 T1 General.
10. Paystubs from 2017 to 2020;
11. 2017 Monthly Salary Breakdown;
12. 2018 Monthly Salary Breakdown, and
13. 2019 Corporation Notice of Assessment.

ii. The applicant also provided the respondent with an IRB report from Green Fortune Accounting Corporation⁷. This report found that the applicant was entitled to an IRB of $400.00 per week based on the documentation provided by the applicant. This report found that the applicant had a decrease in income in 2019 as a result of the accident.

iii. The applicant's submissions were silent in regarding to her lack of compliance with Adjudicator Makhamra's Motion Order.

iv. The respondent submitted that the applicant's IRB quantum for the disputed periods is $0.00. It submitted that since the applicant has failed to comply with the Tribunal's Motion Order, and not provided the required financial information to calculate her IRB, she is not entitled to such until she complied.

v. Furthermore, the respondent argued that the applicant had not provided enough financial documentation to determine the quantum of the IRB to which the applicant is entitled for the period of September 18, 2018 to December 31, 2018. The respondent submitted that the applicant is entitled to $0.00 in IRBs for the period of January 1, 2019 to December 31, 2019.

vi. The respondent also argued that the Green Fortune IRB Report⁸ should be given no weight, as it is based only the applicant's 2018 Person Income Tax Return, and her pre/post-accident paystubs, and not all the documents which the Tribunal ordered to be produced⁹.

The respondent submitted that based on AP v Economical Mutual Insurance¹⁰ and Surani v. Perth¹¹, this is not the correct way to calculate a self-employed person's income for the purposes of calculating an IRB quantum.

vii. The respondent submitted that the Tribunal ought to prefer the report from BDO, which considered all of the financial disclosure provided by the applicant, in accordance with the above-mentioned case law as well as the Schedule.

viii. It also submitted that the BDO cannot fully determine the applicant's post-accident losses/income from September 18, 2018 to December 31, 2018, as the applicant failed to comply with the Tribunal's order to calculate such, namely related to the applicant's operating results for her business during this time period.

ix. In terms of the period of January 1, 2019 to December 31, 2019, the respondent submitted that the applicant is entitled to $0.00 in IRB based on BDO's report¹².

BDO calculated 70% of the applicant's gross, weekly income from her self-employment in the last fiscal year before the accident, meaning 2017, at $1,287.00¹³. Since this sum is greater than $400.00, the applicant's weekly IRB, before deductions, is $400.00 per week.

BDO calculated 70% of the applicant's gross, weekly income from 2019 at $1,068.00¹⁴. Based on section 7(3)(b) of the Schedule, BDO deducted the applicant's post-accident weekly income from self-employment of $1,068.00 from her weekly IRB of $400.00. This resulted in a total amount payable to the applicant at $0.00 for the period of January 1, 2019 to December 31, 2019.

x. I do not agree with the applicant's position, that the documents she provided to the respondent were sufficient to calculate the quantum of IRB she is entitled to. Instead, I also more persuaded by the respondent's arguments related to the applicant's IRB quantum and that the applicant needed to provide the financial documents, as ordered by the Tribunal to ensure that the respondent had a complete financial "snapshot" of her self-employment.

xi. I noted that the applicant did not explain her failure to comply with the Tribunal's Motion Order¹⁵, nor her failure to respect the Tribunal's Order in accordance with section 9.4 of the Licence Appeal Tribunal Rules of Practice and Procedure¹⁶

xii. Moreover, I was more persuaded by the respondent's arguments related to AP v Economical Mutual Insurance¹⁷. This Tribunal decision found that relying on an IRB report that examined the applicant's personal income tax returns and payroll summaries as an employed person, similar to the facts before me, was not sufficient to calculate the applicant's IRB quantum as a self-employed person. The adjudicator in this matter found that further information, such as the applicant's corporate income tax returns, the business' monthly revenue, and labour costs were needed to calculate the applicant's IRB quantum, as also seen in Surani v. Perth¹⁸.

Interest

16In accordance with section 51 of the Schedule, interest is only payable on overdue payments. Since I have found that no benefit is overdue, no interest can be awarded.

CONCLUSION

17As the applicant has not provided the required financial information to calculate her IRB quantum, she is not entitled to such, nor is interest payable.

Footnotes

1. 1O. Reg. 34/10 as amended.
2. 2Based on a letter dated April 22, 2020.
3. 3On May 27, 2020,
4. 4Motion Order dated June 24, 2020.
5. 5On October 5, 2020.
6. 6BDO IRB Report dated October 20, 2019.
7. 7Income Replacement Benefit Report of Green Fortune Accounting Corporation dated November 4, 2019.
8. 8Income Replacement Benefit Report of Green Fortune Accounting Corporation dated November 4, 2019.
9. 9Motion Order dated June 24, 2020.
10. 10A.P. v Economical Mutual Insurance Company, 2019 CanLII 101433 (ON LAT).
11. 11Surani v. Perth Insurance Company, 2018 ONSC 7254.
12. 12BDO IRB Report dated October 20, 2019.
13. 13Based on the applicant's T2 Corporate Income Tax Return and Personal Tax Return of 2017.
14. 14Based on the applicant's T2 Corporate Income Tax Return and Personal Income Tax Return of 2019.
15. 15Motion Order dated June 24, 2020.
16. 16Licence Appeal Tribunal (LAT) Rules of Practice and Procedure, Version 1 (April 1, 2016). The 2016 rules apply to this hearing because the applicant's application was filed before the current Rules came into effect on October 2, 2019.
17. 17A.P. v Economical Mutual Insurance Company, 2019 CanLII 101433 (ON LAT).
18. 18Surani v. Perth Insurance Company, 2018 ONSC 7254.```