Chao Ding v. Wawanesa Insurance, 2023 CanLII 1438

DECISION AND ORDER

Citation: Ding v. Wawanesa Insurance, 2023 ONLAT 20-008236/AABS

Licence Appeal Tribunal File Number: 20-008236/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:

Chao Ding Applicant

and

Wawanesa Insurance Respondent

ADJUDICATOR: Stephanie Kepman

APPEARANCES:

For the Applicant: Yu Jiang, Paralegal

For the Respondent: Michael Ditkofsky, Counsel

HEARD: By way of written hearing

REASONS FOR DECISION AND ORDER

BACKGROUND

1The applicant was involved in an automobile accident on July 24, 2019, and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (including amendments effective June 1, 2016)¹ ("Schedule"). The applicant was denied certain benefits by the respondent and submitted an application to the Licence Appeal Tribunal – Automobile Accident Benefits Service ("Tribunal").

ISSUES

2The issues for the Tribunal to decide are:

i. Is the applicant entitled to an income replacement benefit in the amount of $400.00 per week, from August 1, 2019, until January 18, 2020?

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

LAW

3Section 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 (Canada).

4Section 5(1)2 of the Schedule states that an insurer shall pay an insured person who sustains an impairment as a result of an accident if the person was self-employed at the time of the accident and suffers, as a result of and within 104 weeks after the accident, a substantial inability to perform the essential tasks of her self-employment.

5Section 6(2)(a) of the Schedule states that an insurer is not required to pay an income replacement benefit ("IRB") after the first 104 weeks of disability, unless, as a result of the accident, the insured person is suffering a completed inability to engage in any employment or self-employment for which he is reasonably suited by education, training or experience.

6Section 7(1) of the Schedule states that the amount of an IRB payable to an insured person who becomes entitled to the benefit before his 65th birthday is, the less of "A" and "B" where, A is the weekly base amount found in section 7(2) of the Schedule, less all other income replacement assistance for the week the benefit is payable, and B is $400.

7Section 7(2)1 of the Schedule states that to determine the weekly amount of IRB payable to an insured person, it is the greater amount of section 7(2)1. This means either the weekly base amount of 70 percent of the amount of the sum of the insured person's gross weekly employment income for the first 104 weeks of disability, or $185 if the weekly IRB is for a week for which the person is entitled to receive an IRB after the first 104 weeks of disability.

8Section 7(3)(a) of the Schedule states that an insurer may deduct from the amount of an IRB payable to an insured person; 70 percent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he is eligible to receive an income replacement benefit.

9Section 33(1) of the Schedule that an applicant shall, within ten business after receiving a request from the insurer, provide the insurer with any information required to assist the insurer in determining the applicant's entitlement to a benefit.

10Section 33(1)6 of the Schedule states that an insurer is not liable to pay a benefit in respect of any period during which the insured person fails to comply with section 33(1) of the Schedule.

11Section 36(3) of the Schedule states an applicant who fails to submit a completed disability certificate is not entitled to a specified benefit for any period before the completed disability certificate is submitted.

12Section 51(2) of the Schedule states that interest is due on a benefit that is overdue if the insurer does not pay the benefit within the time stated by the Schedule.

Income replacement benefit entitlement

General Comments

13The applicant focused the bulk of his submissions on his entitlement to an income replacement benefit ("IRB") based on section 5(1)2 of the Schedule, meaning the applicant relied on medical evidence to show that he suffered a substantial inability to perform the essential tasks of his self-employment as a result of and within 104 weeks of the accident. The applicant also argued that the financial disclosure requests of the respondent have been excessive.

14The respondent did not deny² that the applicant was entitled to the pre-104-week IRB, however, it submitted that the issue of quantum is in dispute and the applicant is entitled to a quantum of $0.00 for most of the first disputed period.

15Since the respondent concedes the applicant's entitlement to an IRB for the period of August 1, 2019, to January 18, 2020, there is no need for me to make this finding with respect to entitlement. Accordingly, I focused my analysis on the quantum of IRBs.

16The respondent also submitted that for the period from January 1, 2020, to January 18, 2020, the applicant failed to comply with section 33(1) of the Schedule, and therefore, he is barred from seeking IRBs for this period.

17In response to the respondent's argument that the applicant failed to comply with section 33(1), the applicant submitted that he has made his best efforts to provide the required financial information and answered the respondent's requests for information. Therefore, he should be entitled to the IRB for both periods in dispute.

IRB Quantum for August 1, 2019, to December 31, 2019

Background and arguments

18The respondent submitted that it does not dispute that the applicant is entitled to an IRB for the period of August 1, 2019, to January 18, 2020, but submitted that the issue of the quantum of the IRB is in dispute.

19The respondent submitted that it requested³ that the applicant provide financial disclosure and include copies of his banking statement to demonstrate what income he was receiving before and after his accident since he was self-employed.

20The respondent further submitted that the applicant's counsel did provide some financial disclosure on September 16, 2019⁴, which included the applicant's tax returns from 2018, and his bank statements from before the accident.

21The respondent submitted that it retained Binder Dijker Otte Canada LLP ("BDO") to help the respondent calculate the applicant's IRB quantum and requested⁵ the applicant's bank statements beyond 2018, which the applicant did not provide. The respondent and BDO continued requesting the outstanding financial documents in 2020⁶, with the respondent explicitly stating that if the requested information was not provided by February 27, 2020, the respondent may determine that the applicant is no longer entitled to an IRB based on section 33 of the Schedule.

22The respondent further submitted that the applicant's counsel contacted⁷ the respondent stating that the applicant was not self-employed at the time of his accident and refused to produce additional information in relation to his self-employment. Since the applicant failed to comply with the respondent's section 33 requests, the respondent informed⁸ the applicant he was no longer entitled to an IRB, effective January 18, 2020, and, in the event the applicant did provide the required information, the respondent would reconsider his entitlement beyond that period.

23The applicant's counsel provided the respondent⁹ with copies of the applicant's 2019 tax information. The respondent took issue with the applicant's position that he was not self-employed in 2019, as the applicant's T1 General¹⁰ showed that the applicant earned $15,468.87 in business income in 2019. Therefore, the respondent requested¹¹ copies of the applicant's 2019 T4s, a schedule providing details of his revenue from July 25, 2019, and a statement of business or professional activities form for 2018 and 2019 to determine his IRB quantum of entitlement.

24The applicant provided his own, competing Income Replacement Benefit Report¹² authored by Green Fortune Accounting Corporation, dated August 5, 2020. However, the respondents noted that Green Fortune's Report did not have copies of the applicant's bank account statements, information regarding the applicant's 2020 income, or the applicant's 2020 tax return. The respondent also noted that the report stated that the applicant received self-employment income in 2019 but did not have enough information to determine when this income was earned

25The respondent submitted that the Green Fortune report assumed that the applicant's self-employment income was spread out evenly throughout 2019, and, calculated that the applicant was entitled to the following in IRB payments:

26The parties then attended a Case Conference on December 2, 2020, where the respondent raised the issue of outstanding production of financial documents¹³.

27The applicant objected to the disclosure, except for the Ontario Health Insurance Program ("OHIP"), however, the Tribunal ordered that all documents requested by the respondent be provided by April 30, 2021, with the applicant being required to make "best efforts". The respondent's counsel contacted the applicant's counsel on 3 occasions¹⁴ to request the outstanding documents ordered by the Tribunal and then brought a Motion¹⁵ to assist with disclosure.

28The respondent's counsel received a copy of the applicant's 2020 Notice of Assessment ("NOA") from the applicant', which indicated that the applicant earned a total of $24,851.00 in income in 2020 but did not provide information as to what percentage or amount represented the applicant's self-employment income.

29The respondent submitted that it received copies of the applicant's complete 2019 and 2019 bank statements¹⁶, however, the statements failed to include the schedule of details the respondent specifically requested and instead simply showed deposits listing Stripe, a known credit card processing company, and numbered "Business Pads" as the descriptors and did not state if all or some of these deposits were self-employment earnings. The respondent also noted that the total of the applicant's 2019 bank deposits was $18,368.72.

30BDO prepared the applicant's IRB report without the applicant's self-employment information and found that the applicant earned $16, 256.00 in gross revenue, adjusted for Harmonized Sales Tax ("HST"), between August 1, 2019, and December 31, 2019. BDO's report then made reasonable expense deductions and determined that the applicant's self-employment for the period in dispute was $11,797.00. The respondent noted that the applicant's tax return from 2018 showed that he earned $22,723.69 in commission income and $534.35 in employment income.

31The respondent submitted that based on the applicant's 2018 tax information, he earned $23,258.00. Based on this, the respondent submitted that:

"$23,258.00 ÷ 52 weeks x 70% = $313.09"

32The respondent further submitted that based on that calculation, and confirmed by BDO¹⁷, the applicant is entitled to a weekly benefit of $313.09 based on section 7(2) of the Schedule.

33The respondent submitted that the applicant's gross income for the 21.86-week, post-accident period, meaning from August 1, 2019, to December 31, 2019, was $11,797.00 and therefore, based on section 7(3) of the Schedule, the respondent is entitled to deduct $377.76 from the applicant's IRB, as:

"$11,797.00 ÷ 21.86 weeks x 70% = $377.76"

34The respondent submitted that it is entitled to deduct $377.75 per week from the applicant's IRB for the disputed period. Since the applicant's IRB quantum is less than the deduced amount, the respondent submitted the applicant experienced no economic loss as a result of his accident and is entitled to a quantum of $0.00.

35The applicant submitted he is entitled to an IRB in the amount of $400.00 per week from August 1, 2019, to January 18, 2020, and that the requests from BDO have been excessive, as the applicant has already provided his:

i. Employer's Confirmation Form ("OCF-2") ii. IRB Report that was prepared by Green Fortune Accounting Corporation; iii. T1 General 2019; iv. T4 of 1974159 Ontario Inc. 2019; v. Notice of Assessment 2018; vi. Notice of Assessment 2019; vii. Notice of Assessment 2020; viii. Record of Employment from Challenger Gaming; ix. T1 General 2018; x. T4 of Food HWY Ontario Inc. 2018; xi. T4A of Food HWY Ontario Inc. 2018; xii. T4A of Homelife Inspiration Realty Inc. 2018; xiii. Paystubs from July 1 to July 24, 2019; xiv. Bank Account Activity for 2018 and 2019. xv. Bank Statement for 2018, 2019 xvi. Work history, indicating not self-employed xvii. Statement by the Applicant dated October 18, 2019

36To demonstrate his point, the applicant relied on the matter of 17-004906 v Coachman Insurance Company,¹⁸ where the Tribunal found that BDO's requests for further and supporting documentation with respect to a self-employed applicant were excessive, as the applicant provided his self-employment income via his tax returns and an accounting report based on said returns and that BDO's requests beyond the applicant's income tax records were excessive.

37The applicant also submitted that the Tribunal must consider proportionality with respect to financial disclosure, as seen in Motion Order for matter 18-006404 v Aviva Insurance Company¹⁹, where Vice-Chair Maureen Helt addressed the issue of bank statements and found that the respondent had failed to establish why the bank statements in question were relevant or necessary, since the respondent already had the applicant's income information, and that said production would be highly intrusive.

Analysis

38After considering the submissions and evidence of the parties, based on a balance of probabilities, I find that the applicant is entitled to an IRB for the disputed period in the amount of $0.00.

39I reviewed the evidence of the respondent and found that it repeatedly made efforts to try to determine if the applicant was self-employed and how much his earnings were by requesting copies of his bank statements from before and after his accident. I also agreed that the respondent is entitled to these documents pursuant to section 33(1) of the Schedule.

40Though the applicant did eventually provide his tax information and NOAs, this information did not assist the applicant's arguments. This is because inconsistencies between his reports of being self-employed versus employed began to arise. This included examples such as the Stripe deposits to and numbered "business pad" deposits on the applicant's bank statements during 2019, and his 2019 T1 statement, despite the applicant's claim to not be self-employed.

41When considering the quantum of entitlement to an IRB for a self-employed person, the respondent must be able to clearly analyze the impact of the applicant's accident on his income, be it an employed or self-employed person.

42In this case, the applicant has refused to provide the detailed information requested by the respondent to determine if the applicant was self-employed during 2019 and if so, what his earnings were during the year.

43Though I did find that the applicant provided sufficient information in relation to his earnings before his accident, meaning those of 2018, I find that the applicant has not complied with either section 33(1) of the Schedule or the Tribunal's Case Conference Report and Order.

44I also noted that the applicant has addressed his concerns with respect to the intrusive nature of the respondent's and BDO's disclosure requests in the Case Conference and in a subsequent Motion.

45Since the Tribunal has already determined on 2 occasions that the applicant was required to provide the financial disclosure documents requested by the respondent, and the applicant has not provided information that he has complied with the request and Order, I see no authority for the Tribunal to address this for the third time, nor has the applicant provided me with such.

46Moreover, since the issue of disclosure has been decided on 2 prior occasions, it would be inappropriate for me to reconsider this decided issue, based on the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure – October 2, 2017, as amended, specifically Rule 18.1.

47Had this not been the case, I also would have preferred the report of BDO over that of Green Fortune Accounting Corporation, as the approach that Green Fortune chose to use to determine the applicant's self-employment earnings failed to consider the inconsistencies in the applicant's self-employment, as discussed above. Instead, I preferred the report of BDO, which fully accounted for the applicant's self-employment income and did not make any assumptions based on this.

48The applicant failed to address why he did not provide a breakdown of his earnings for the disputed periods, nor why there appeared to be inconsistencies with his earnings in 2019.

49In order to explore these inconsistencies, the respondent needed a schedule of details to fully decipher the applicant's bank records, as he had deposits from Stripe, a known credit card processing company and "Business pads", which the applicant failed to do.

50I also agree that given the circumstances, the respondent was entitled to the financial schedule to fully understand which earnings from the applicant were from employment versus those from his self-employment. I also find that the requests by both the respondent and BDO were not excessive, despite the applicant's previous disclosure.

51Though I did consider the matter of 17-004906 v Coachman Insurance Company²⁰, I did not find this matter persuasive, as in that matter, the applicant was able to fully explain his self-employment income and there were no inconsistencies with his documentation. This contrasts the subject accident, where the applicant's T1 and NOA from 2019 leave questions with respect to the applicant's business earnings.

52Moreover, paragraph 30 of said decision specifically addresses the issue of non-compliance and section 33(6) of the Schedule and that an insurer may withhold benefits during the period of non-compliance.

53With respect to the applicant's arguments regarding Motion Order 18-006404 v Aviva Insurance Company²¹, I also find this to be distinct from the subject accident before the Tribunal, as in 18-006404, the Vice-Chair held found that the respondent had failed to show why the applicant's bank statements were reasonable and necessary. In the subject matter, the applicant's arguments with respect to this have already failed at a Case Conference and Motion Hearing.

54Additionally, given my comments above regarding the irregularities in the applicant's reported income, I also find the description of the applicant's bank deposits to be relevant.

55Since the applicant failed to provide the required disclosure, I find he has failed to make his case that he is entitled to an IRB quantum of $400.00 per week. Therefore, I accepted the respondent's calculations and accept the applicant's quantum of IRB to be $0.00 for the disputed period.

IRB Quantum for January 1, 2020, to January 18, 2020

56With respect to the applicant's IRB quantum for the period of January 1, 2020, to January 18, 2020, the respondent submitted that the applicant failed to comply with section 33(1) of the Schedule and did not produce documents he was ordered to provide by the Tribunal²².

57The respondent submitted that the applicant failed to produce his bank statements, and therefore, based on section 33(6) of the Schedule, the respondent is not required to pay for the IRB until the applicant complies.

58The applicant reiterated his arguments with respect to the excessive disclosure of the respondent.

59After considering the submissions and evidence of the parties, based on a balance of probabilities, I find that the applicant is not entitled to proceed with his IRB for the period of January 1, 2020, to January 18, 2020, until he complies with the respondent's section 33 request.

60As discussed above, I found that the respondent's requests for clarification with respect to the applicant's employment and self-employment earning to be relevant and not excessive.

61As the applicant has failed to comply with section 33(1) of the Schedule, section 33(6) is activated, which prevents the applicant from proceed until he complies with the respondent's information requests.

Interest

62Since I have found that no benefits are payable to the applicant, I find that no benefits are outstanding, and therefore, the applicant is not entitled to claim interest.

COSTS

63The respondent also raised the issues of costs.

64Rule 19.1 provides that a party may make a request to the Tribunal for its costs, where a party believes that another party in a proceeding, has acted unreasonably, frivolously, vexatiously or in bad faith.

65Rule 19.2 allows this request for costs to be made anytime before the decision is released.

66Rule 19.6 allows the Tribunal to award up to $1,000.00 for each full day of attendance at a motion, case conference or hearing.

67The respondent requested costs in the amount of $1,000.00 based on Rule 19.6 related to preparing for the hearing. The respondent submitted that the purpose of awarding costs seen in Rule 19.1 should apply in the subject matter, as the applicant has acted frivolously.

68The respondent relied on the matter of 16-001243 v Aviva Insurance²³, where Adjudicator Joseph Met found: "A party could be said to have acted "frivolously" if the claim or defence lacked a legal basis or was not serious or reasonably purposeful."

69The respondent submitted that the accounting report of Green Fortune demonstrates that the applicant was aware of the requirements under the Schedule to be entitled to an IRB and that the respondent was entitled to deduct post-accident income from the applicant's IRB when determining quantum.

70The respondent submitted that both its counsel and BDO reached out to the applicant regarding the financial disclosure issues for over a year, and the applicant chose not to disclose his documents, despite being ordered to do so.

71The respondents submitted that the applicant did not comply with the Tribunal because he was aware that if he provided the required financial information, he knew he would no longer qualify to receive the benefit due to his post-accident income.

72The respondent also submitted that the applicant failed to disclose his financial information to avoid having to pay an award for his behaviour.

73The respondent concluded by stating that the applicant's pursuit of his IRB, despite being aware of not qualifying, should be seen as frivolous and there was no legal basis or reason for him to claim an award, and the Tribunal should award costs to deter future similar applications.

74The applicant did not address this issue in his submissions.

75After considering the submissions and evidence, I find that the respondent is not entitled to costs. Though I appreciated the respondent's submissions, I disagree that the accounting report of Green Fortune demonstrates that the applicant was aware of the requirements under the Schedule.

76As such, I found the matter of 16-001243 v Aviva Insurance²⁴ not to be relevant, as I find that the respondent has not shown that the applicant was aware that his claim lacked a legal basis, was not serious or reasonably purposeful.

77Instead, the respondent's comments should have been addressed to the applicant's counsel, who definitively possesses the background, education and experience to be able to interpret the applicant's accounting report and also find and interpret sections of the Schedule. Moreover, counsel is responsible to ensure that her client understands the legal proceedings he is engaged in.

78However, given the Schedule's purpose of being a consumer protection act, I find it would be counter-intuitive for the Tribunal to penalize the applicant due to issues with his representation.

79Therefore, without persuasive evidence that the applicant specifically continued with his application despite knowing he did not qualify for an IRB, I decline to award costs.

CONCLUSION and order

80The applicant is entitled to an income replacement benefit in the amount of $0.00 per week from August 1, 2019, to December 31, 2019.

81The applicant may not proceed with his application for an income replacement benefit for the period of January 1 to 18, 2020, until he complies with the respondent's section 33 requests.

82The applicant is not entitled to interest.

83The respondent is not entitled to costs.

Footnotes

1. 1O. Reg. 34/10 as amended.
2. 2Paragraph 35 of the respondent's submissions.
3. 3Letter from the respondent to the applicant dated August 8, 2019.
4. 4Fax from the applicant's counsel to the respondent, dated September 16, 2019.
5. 5Fax from BDO to the applicant's counsel dated November 1, 2019.
6. 6Letters from BDO and the respondent, dated December 3, 19 2019 and January 6, 2020, and February 11, 2020.
7. 7Fax from the applicant's counsel to the respondent dated February 27, 2020.
8. 8Letter from the respondent to the applicant dated March 2, 2020.
9. 9Fax from the applicant's counsel to the respondent dated April 15, 2020.
10. 10Applicant's T1 Generate of 2019.
11. 11Letters from the respondent to the applicant dated April 20, 2020, and May 22, 2020.
12. 12Income Replacement Benefit Report of the applicant authored by Green Fortune Accounting Corporation, dated August 5, 2020.
13. 13Case Conference Report and Order of Adjudicator Nathan Ferguson dated December 24, 2020.
14. 14Letters from the respondent to the applicant, sent via email dated January 4, February 4 and March 4, 2021.
15. 15Notice of Motion dated May 4, 2021.
16. 162018 and 2019 CIBC bank statements of the applicant.
17. 17BDO Income Replacement Benefit report dated October 1, 2021.
18. 1817-004906 v Coachman Insurance Company, 2018 CanLII 81883 (ON LAT) at para. 28.
19. 1918-006404 v Aviva Insurance Company, 2019 CanLII 43881 (ON LAT) at paras. 30, 31, and 32.
20. 2017-004906 v Coachman Insurance Company, 2018 CanLII 81883 (ON LAT) at para. 28.
21. 2118-006404 v Aviva Insurance Company, 2019 CanLII 43881 (ON LAT) at paras. 30, 31, and 32.
22. 22Case Conference Report and Order of Adjudicator Nathan Ferguson dated December 24, 2020, and Motion Order of Vice Chair Ian Maedel dated May 28, 2021.
23. 2316-001243 v Aviva Insurance, 2016 CanLII 104569 (ON LAT) at para. 13
24. 2416-001243 v Aviva Insurance, 2016 CanLII 104569 (ON LAT) at para. 13