Aflo v. Aviva General Insurance Company, 2022 CanLII 14958

Citation: Aflo v. Aviva General Insurance Company 2022 ONLAT 20-001404/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:

Fhilomena Aflo

Applicant

and

Aviva General Insurance Company

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Sandeep Johal, Vice-Chair

APPEARANCES:

For the Applicant:

Ian Little and Dianna Morello, Counsel

For the Respondent:

Danielle Wilkinson, Counsel

HEARD:

By way of written submissions

OVERVIEW

1The applicant was injured in an automobile accident on August 12, 2019 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule'').

2There is no dispute between the parties that the applicant meets the disability test and that she is entitled to an income replacement benefit (“IRB”). The parties disagree over whether Employment Insurance (“EI”) sickness benefits are deductible as “gross employment income” from the total IRB payable.

3The respondent takes the position that the EI sickness benefits are “gross employment income” under s. 7(3) of the Schedule and it is therefore entitled to a deduction of the IRB paid.

4The applicant disagreed with that decision and submitted an application to the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”).

ISSUES TO BE DECIDED

5As a result of the case conference Order dated December 8, 2020 the following are the issues to be decided:

i. Is the applicant entitled to receive an IRB in the amount of $400 per week for the period of August 19, 2019 to July 27, 2020, denied/suspended by the respondent on March 10, 2020?

ii. Is the respondent entitled to a repayment of IRB paid in the amount of $5,208.15 less any amounts withheld from ongoing benefits up to July 27, 2020?

iii. Is the applicant entitled to an award under s. 10 of Regulation 664 for unreasonably withheld or delayed payment of benefits?

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

v. Is the applicant entitled to costs?

RESULT

6I find that the applicant is entitled to an IRB in the amount of $148 for the first week of August 19, 2019 and $400 per week for the period of August 26, 2019 to July 27, 2020

7The respondent is not entitled to a deduction of EI sickness benefits post-accident.

8The applicant is entitled to interest on any improperly deducted EI sickness benefits.

9The applicant is not entitled to an award or costs.

ANALYSIS

10After reviewing the parties’ submissions, the issues to be address as part of this decision are: What is the quantum of IRB the applicant is entitled to? Is the respondent entitled to a deduction of IRB for the applicant’s receipt of EI sickness benefits? And, is the respondent entitled to a repayment of the IRB despite the notice seeking a repayment being incorrect?

What is the quantum of IRB the applicant is entitled to?

11I find that the applicant is entitled to an IRB in the amount of $148 for the first week of August 19, 2019 and $400 per week for the period of August 26, 2019 to July 27, 2020. The onus is on the applicant to prove on a balance of probabilities and I find that the applicant has done so for the following reasons.

12The applicant submits that based on the OCF-2 (Employer’s Confirmation Form) the gross weekly income is $1,578.90, 70% of which is $1,105.29, and therefore, the applicant is entitled to $400 per week of IRB except for the first week of IRB entitlement when the applicant should have received $148 or 70% of $360 of her gross employment income. The respondent does not provide any submissions or evidence to refute the applicant’s calculations and therefore I find the point conceded.

13The respondent’s submissions and evidence largely focus on the deductibility of the EI sickness benefit from the applicant’s IRB quantum. As a result, I will now turn to discuss whether the respondent is entitled to deduct an EI sickness benefit from the applicant’s IRB.

EI sickness benefit is not deductible from an IRB.

14The respondent is not entitled to a deduction for EI sickness benefits from the IRB for the following reasons.

15After the parties’ submissions were due to be filed with the Tribunal, the Tribunal released a decision on the deductibility of EI sickness benefits from an IRB in the case of Spence v. Aviva Insurance Company of Canada.² I wish to thank the parties for providing a joint communication forwarded to my attention of the Spence case which I find to be exactly on point to the issue in dispute between the parties.

16After reviewing the parties’ submissions on the issue of whether an EI sickness benefit is deductible from an IRB and after reviewing the Spence case, I agree with the reasoning in Spence in paragraphs 15-22 and adopt it for the purposes of this decision as the facts in the present case are identical to those in Spence.

17In Spence, it was stated as follows:

19In my view, this approach makes sense where an applicant suffers an accident-related impairment that prevents them from working, which I agree is different than EI benefits not received in respect of an impairment; for example, EI maternity benefits (which the case law has found to be deductible as income) or EI unemployment benefits (which requires the applicant to be willing and able to work). There is no dispute that the applicant’s accident-related injuries qualified as an “impairment” under s. 3, as her entitlement to IRB is not in question, and that her impairment was a temporary one, as the narrow period in dispute is only 15 weeks. Under s. 47(1), Aviva would be entitled to deduct the applicant’s EI sickness benefits as a temporary disability benefit received “in respect of an impairment” from the amount payable on an IRB. However, this is not the case, as in the same section, s. 47(3)(a)(f)(i) then specifically excludes benefits payable under the Employment Insurance Act under the definition of “temporary disability benefit”.

20I find that this would still be the case if EI sickness benefits were treated under another definition. For example, if the applicant’s EI sickness benefits received as a result of her accident-related impairments were treated like pre-accident income, the benefit would be considered “gross employment income”, pursuant to s. 4(1). However, where the EI sickness benefit is only received as a result of an impairment that renders the applicant unable to work, I find the ambiguity would be increased by s. 7(3)(a) because that section states that the applicant must be “employed after the accident and during the period in which he or she is eligible to receive” an IRB. While the applicant’s position was being held for her during her 15-week absence, I am not prepared to find that her EI sickness benefit was “employment income” because she was unable to work as a result of the accident during this time. Rather, it is, as the benefit is named, “employment insurance”. On this interpretation, I see how the adjudicators in Nelson and S.W. were able to arrive at the conclusion that other EI benefits are deductible from IRB because EI sickness benefits are the only EI benefits captured under s. 47(3) as resulting from an “impairment”, whereas childrearing and unemployment are not.

21Further, if the applicant’s EI sickness benefits are defined as “other income replacement assistance” under s. 4(1) then any deduction would be precluded by s. 4(1)(a)(i), which specifically excludes all EI benefits. If the applicant’s EI sickness benefits are defined as deductible under s. 47(1) as “collateral” or “temporary disability benefits” then that deduction is also precluded by s. 47(3)(f)(i), which again excludes all EI benefits. In this regard, I follow the applicant’s reply submissions “that EI sickness benefits, unlike EI maternity and unemployment benefits, are generally earned after the accident. If they are earned prior to the accident, they would have been earned as a result of an unrelated impairment.” I agree that this is not the case here. So, I quote the applicant again: “As such, the EI sickness benefit does not factor into the calculation of an IRB quantum as pre-accident income. If [Aviva] was entitled to deduct EI sickness benefits by the operation of s. 4(1), zero per-cent of the EI sickness benefit received would factor into the quantum of the IRB payable, but 70% of the EI sickness benefit would be deductible post-accident. This results in an over deduction.” I find this argument persuasive in my support for the applicant’s position that if the legislature did not intend to treat EI benefits differently, it would not have specifically included them as deductible under one section, and specifically excluded them as not deductible under another. I agree that this would result in an over-deduction as a result of an impairment.

22For these reasons, I agree with the applicant that her EI sickness benefits, received in respect of her impairment, are not deductible when calculating the quantum of IRB payable. Accordingly, I find that she is entitled to the further IRB payment in the amount of $5,901.00, plus interest under s. 51, as her EI sickness benefit was improperly deducted from her IRB.

18In the present case, I do not agree with the respondent that the EI sickness benefits being received are as a result of the applicant being employed after the accident. I agree with the applicant that the EI sickness benefits received post-accident are based on her employment up to the accident and not as a result of being employed after the accident.

19Furthermore, it is trite law that that the Schedule is remedial in nature and any exclusions should be narrowly interpreted and inclusions should be read liberally. As a result of the above and the reasoning of the Spence case, I find that the EI sickness benefits are not “gross employment income” and the respondent is not entitled to deduct the applicant’s EI sickness benefits from the IRB.

Is the respondent entitled to an IRB repayment?

20I find that repayment issue is moot as a result of finding that EI benefits are not deductible, however, even if I were to find that the EI sickness benefit was deductible, I find that the respondent is not entitled to deduct them because the respondent’s notice seeking a repayment is deficient.

21The onus on a repayment of benefits is on the respondent and in this case, the respondent accepts that its notice dated March 10, 2020 was incorrect in that it sought a repayment amount in excess of what was actually being requested. The respondent’s notice seeks a repayment in the amount of $5,208.15 when it should have been $4,958.93 and the notice states that the respondent will reduce future IRB payments by 20 per cent of the benefit against the overpayment.³ The notice references the amount and includes a calculation statement from the respondent’s accountant at Williams & Partners. After reviewing the enclosures attached to the notice, I find that the calculation is not clear to an unsophisticated person. There is no clear explanation of the calculation and why there is an overpayment. The enclosures note post accident income from employment as “Source 1” and “Source 2”. It is entirely unclear what that means and how or where these “Source” calculations are derived from.

22The respondent submits its notice was in compliance with s. 52 of the Schedule which sets out the requirements the respondent shall follow when seeking a repayment. The section requires the notice to be given within 12 months after the payment of the amount that is to be repaid, the notice shall set out the amount that is required to be repaid and set out that the insurer intends to collect the amount by reducing each subsequent payment by up to 20 per cent. According to the respondent, its notice was in compliance with the Schedule. The respondent further submits that in the “spirit of section 52” the applicant was “clearly aware” of the overpayment within 12 months notwithstanding the repayment amount was incorrect and despite the fact that the respondent requested a repayment in an amount that was in excess of what it alleges the applicant owed.

23The respondent further submits that it is open for the Tribunal to make a finding on the correct quantum to be repaid and that the Tribunal is not bound by what is stated in the notice. In support of its position, the respondent relies upon the Court of Appeal decision of Turner v. State Farm Mutual Insurance Company,⁴ that a notice may meet the requirements of the Schedule even if it includes technical defects.

24I do not agree with the respondent. In Turner, the court held that the Schedule obliges the insurer to give the insured “the reasons for the refusal” of a benefit and that those reasons do not need to be legally correct. The court stated as follows:

[T]he purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation. If the reasons give are legally wrong the insured will succeed in that challenge. Requiring that the reasons be legally correct goes beyond both the requirement in the relevant regulation, and purpose of such a notice.⁵

25The court in Turner was referring to a denial of a benefit and not a notice of repayment. Turner stands for the proposition that all that is required for a valid denial of a benefit was a notice of termination which gives the insured a reason to understand that the benefit was being denied so that they could, in a timely way, contest the denial.⁶

26That is not the situation in the present case. Here, I find that a repayment notice of an IRB where the insurer can unilaterally deduct those same benefits by deducting future IRBs owing to the applicant, requires more accuracy. The onus is on the respondent to ensure the amount being requested to be repaid is correct. In keeping with the consumer protection mandate of the Schedule, it would be highly prejudicial to an applicant if an insurer was allowed to haphazardly calculate a repayment amount and then to start deducting those payments without any recourse by the applicant to challenge the incorrect amount in a timely way.

27As a result, I find that the amount being requested to be repaid was incorrect. The calculation and the explanation of the amount or the reasons for the repayment was not clear for an unsophisticated person to understand and as a result, I find that the respondent’s notice of repayment was not in compliance with the Schedule and therefore the respondent is not entitled to a repayment.

AWARD

28The applicant seeks an award in accordance with s. 10 of Regulation 664. For the following reasons I find that the respondent did not unreasonably withhold or delay the payment of benefits and the applicant’s request for an award is dismissed.

29In order for an award to be granted, the applicant must provide compelling evidence on a balance of probabilities that the respondent’s conduct was excessive, imprudent, stubborn, inflexible, unyielding, and immoderate. The threshold for awarding a s. 10 award is very high. In the present case, I do not find that the respondent, having taken a novel position on the matter of EI sickness benefits being deductible from an IRB, is evidence of it unreasonably withholding the benefit. At the time of the claim and even by the time the parties’ submissions were due, there was not a case at the Tribunal which could be considered to have provided direction in the present fact scenario. It was not until after the submissions were due did the parties jointly bring forward the Tribunal case where a similar fact scenario was adjudicated. Taking a position on a novel situation in my view would not be evidence of behaviour on the part of the respondent that would show that it unreasonably withheld or delayed the payment of benefits and the claim for an award is dismissed.

COSTS

30The applicant seeks costs as a result of a motion order for productions of adjuster log notes. The test under Rule 19 requires unreasonable, frivolous, vexatious or bad faith conduct. I find that the test is not met in this case for the following reasons.

31The applicant submits that there is a pattern of deliberate or careless conduct from the respondent including:

• A failure to deliver a response to the Tribunal application or a case conference summary within the prescribed timelines;
• Being late in producing the complete adjuster log notes without explaining why certain portions were redacted;
• Claiming the adjuster log notes were complete and later having acknowledged that they were incomplete;
• Being careless in calculating the IRB;
• Abandoning its claim to deduct EI sickness benefits and then later seeking to deduct them from the IRB;
• Providing a repayment notice with deficiencies;
• Waiting 5 months to make the first IRB payment.

32I would agree with the applicant that the handling of the file from the respondent was not pristine and there were errors along the way such as misclassifying adjuster log note entries, finding log notes after the fact, making an error in the calculation of the IRB as well as making an error in calculating a repayment request.

33However, I am not persuaded that the errors made by the respondent including its failure to file a response or a case conference summary within the prescribed timelines would constitute conduct that is unreasonable, frivolous, vexatious or in bad faith. The applicant submits that she had to wait 5 months before the first IRB payment. While such a long delay was not ideal in the circumstances, the evidence shows that the respondent made a request for documents shortly after the OCF-1 and OCF-2 were submitted, including a request for an election of benefits form. I am not persuaded that the delay in the payment of the IRB could be considered to be unreasonable, frivolous, vexatious or in bad faith.

34Abandoning a claim to deduct EI sickness benefits and then later seeking to deduct them by taking a position on a novel point of law is not, in my view, a course of conduct that would pass the threshold to make an award for costs. Parties are entitled to argue on a point of law and that would not, on its own be considered unreasonable, frivolous, vexatious or bad faith.

35The missing log notes were admitted to being in error and the miscalculating of the IRB repayment on its own, does not pass the threshold for a costs award. Errors are made and the parties are not held to a standard of perfection in their dealings with each other. To satisfy the threshold for an award of costs, there must be a pattern of behaviour that is unreasonable, frivolous, vexatious or in bad faith and I am not persuaded of conduct that would pass the threshold to award costs in these circumstances.

INTEREST

36Based on the submissions of the parties, it is not clear if EI sickness benefits were in fact deducted from the IRB. If they were, the applicant is entitled to interest, in accordance with the Schedule on the portion of the IRB that was deducted with respect to the EI sickness benefits and for any portion that was deducted as a result of the inaccurate repayment request by the respondent.

ORDER

37The applicant is entitled to an IRB in the amount of $148 for the first week of August 19, 2019 and $400 per week for the period of August 26, 2019 to July 27, 2020

38The respondent is not entitled to a deduction of EI sickness benefits post-accident.

39The applicant is entitled to interest on any improperly deducted EI sickness benefits.

40The applicant is not entitled to an award or costs.

Footnotes

1. 1O. Reg. 34/10.
2. 22021 CanLII 19494 (ON LAT) (“Spence”)
3. 3Respondent’s Written Submissions at Tab J.
4. 42005 CanLII 2551 (ON CA). (“Turner”)
5. 5Turner at para. 8.
6. 6Turner at para. 9.