Licence Appeal Tribunal File Number: 21-007094/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:
Hazem Fathalla
Applicant
and
TD General Insurance Company
Respondent
DECISION
ADJUDICATOR:
Sandra Driesel
APPEARANCES:
For the Applicant:
Hazem Fathalla, Applicant
Vismay H Merja, Counsel
For the Respondent:
Crystal Krandel, Adjuster
Arfa Saeed, Counsel
Sean Cheskes, Counsel
Court Reporter:
Brenda Clancy
HEARD: by Videoconference:
January 10 and 11, 2023
OVERVIEW
1Hazem Fathalla (the “applicant”) was involved in an automobile accident on September 4, 2018 and sought benefits pursuant to the Statutory Accident Benefits Schedule (the “Schedule”) - Effective September 1, 2010 (including amendments effective June 1, 2016).
ISSUES TO BE DECIDED
2The issues to be decided in the hearing are:
i. What is the quantum of an income replacement benefit (“IRB”) that the applicant is entitled to from September 11, 2018, to March 24, 2021?
ii. Is the applicant entitled to interest on any overdue payment of IRB?
iii. Is the respondent liable to pay an award under s. 10 of Regulation 664 because it unreasonably withheld or delayed payments to the applicant?
PRELIMINARY ISSUES
3The respondent brought a motion seeking a change to the issue in dispute regarding quantum of the IRB (listed as “i” above). The respondent submits the period of entitlement in dispute should be changed from September 11, 2018, to September 1, 2020, being the period reflecting the first date of entitlement to the 104-week mark.
4The respondent argues that there is a different test for entitlement to IRB pre- and post-104-weeks. It proposes that section 44 assessments related to post-104-week entitlement have not been conducted and therefore the determination of quantum should only include what the applicant should receive up to the 104-week mark.
5The applicant opposed this request, because it was raised on the first day of the hearing and he was not given an opportunity to prepare a response, and he relied on the denial letter of March 10, 2021, from TD Insurance advising him that payment of the benefit [IRB] would be stopped effective March 24, 2021, based on a section 44 examination.
6I denied the request to change the issue in dispute regarding the period of entitlement to end before March 24, 2021, having considered the following:
i. I agree that the test for both entitlement to the IRB and the calculation of quantum pre- and post-104-week mark differ, but based on the denial letter of March 10, 2021, the insurer stopped the IRB 29 weeks after the 104-week mark (of September 1, 2020). The letter from the insurer states that based on insurance examinations summarized in a report dated February 24, 2021, the applicant does not suffer a complete inability to engage in any employment for which he is reasonably suited by education, training or experience. It then states the benefit to be stopped effective March 24,2021.
ii. I find that the insurer did not make any distinction between the pre- and post periods of entitlement in this denial letter. To me, lacking any other evidence to the contrary, the insurer implied the applicant was entitled to benefits up to March 24, 2021.
iii. Based on the above, from evidence provided me by both parties, I must decide, the quantum of the IRB the applicant is entitled to for the following periods:
a. For the period September 11, 2018, to September 1, 2020; and
b. For the period post 104 weeks from September 11, 2020, to March 24, 2021.
EVIDENCE
7The parties agree that prior to the subject accident the applicant was engaged in part-time employment at a gas station while engaging in the following self-employment activities:
i. The applicant was a self-employed property manager of residential units and a commercial unit (operating as a numbered company).
ii. The applicant was a self-employed property manager operating two rental units as a sole proprietor.
8To support their position of the quantum of IRB the applicant is entitled to, the parties relied on the following evidence:
i. The applicant submitted an accounting report dated April 6, 2022, prepared by “S&T Accounting” and called witness Ivan Semenov, co-owner of the accounting firm and author of the report, to speak to this report. The report calculates the quantum of the IRB to be $27,310.00 and interest for the period September 11, 2018 to September 1, 2020
ii. The respondent submitted an accounting report dated February 18, 2020, prepared by Price Waterhouse Coopers LLP (“PWC”) and called witness Jim Forbes, accountant to speak to this report. The report calculates the quantum of the IRB to be $1,791.70 for the period September 12, 2018, to December 31, 2018, and “nil” for the period January 1, 2019, to February 11, 2020.
9It is important to note that neither report calculated a quantum for a post 104-week IRB entitlement. The applicant’s report calculates that a minimum of $5,365.00 (29 weeks X $185.00) is payable for the post 104-week IRB period in dispute. The applicant suggests the Schedule implies that a post 104-week quantum is a “minimum” of $185.00 per week, and he is relying on section 7(2)1 ii of the Schedule to support this amount:
[Amount of weekly income replacement benefit]
7(2)1ii the greater of the amount determined for the purposes of subparagraph i and $185.00, if the weekly income replacement benefit is for a week for which the person is entitled to receive an income replacement benefit after the first 104 weeks of disability.
ANALYSIS
10I find that both accounting reports have correctly applied the principles of calculation of the IRB in accordance with section 7 of the Schedule. Both reports considered the applicant to be both employed and self-employed prior to the accident and both reviewed most of the same documentation for the common periods being reported by them, such as T4 statements, Income Tax returns, etc. However, the applicant testified that there was some information provided to the applicant’s accountant that was not given to the respondent’s accountant such as the fact he hired labourers and that he neglected to account for all expenses on his income tax filings because he was dealing on a cash basis.
11The main difference between these two accounting reports in evidence is:
i. The application of lost income in the calculation of the quantum, what if any, is the amount of any lost income by the applicant as a result of the fire to one of the applicants’ properties that rendered it inoperable for some time (and therefore not attributable to the accident)?
ii. What if any, is the amount of any lost income by the applicant as a result of the subject accident?
The Applicant’s Report by S&T Accounting:
12Mr. Ivan Semenov, who authored the applicant’s report, admits that his calculations only considered financial losses to be attributed to the subject accident alone. He stated he was aware of the March 2018 fire on the rental property, but he believed the net loss on that property was due to the fact the applicant was unable to return to his work on this property because of injury sustained in the accident and he incurred additional expenses through the necessity to hire labourers.
13Mr. Semenov states he calculated the labour expenses as reported by the applicant (verbally) and considered them in the IRB quantum calculation. He admits he did not consider calculating a lack of income that may be because of the fire. However, in evidence is a May 3, 2018, letter from the applicant, attached to his 2018 T2 Corporate tax return that states: “Due to fire-loss in March 2018 there is no rental income for the balance of the year.” This loss is not factored into the applicant’s accounting report as being accident related.
14Mr. Semenov testified that when he compared the two accounting reports (meaning the applicant’s and the respondent’s reports) in evidence, and given he is aware of facts brought up in the hearing that he had not known when he was completing his report, he now believes neither report has appropriately calculated the quantum of the IRB. He admits an error in his report for not considering any loss of self-employment income related to the fire on the rental property and that he believes the respondent’s report is also flawed because it does not consider any loss as attributable to the accident. He stated when testifying that “the correct quantum of IRB most likely falls somewhere in between the two accounting reports in evidence”.
The Respondent’s Report by PWC:
15Mr. Jim Forbes gave evidence to the content of the respondent’s report, admitting that he did not author it, but reviewed it in preparation for this hearing. He explained the content of the report by means of identifying how specific information such as tax returns, financial statements, etc. had been entered into a template designed to calculate an IRB quantum considering an employment and self-employment situation like this one.
16Mr. Forbes explained how the economic loss calculated was based on the fire on the rental property that happened in March 2018. He admits that the calculations do not consider any loss of self-employment income to be directly attributable to the subject accident. There was no consideration of what impact it might have to self-employment income if the applicant was unable to work because of injury sustained in the accident.
17Mr. Forbes admits that, as stated in the report, some information requested from the applicant was never received and that may have had an impact on the IRB quantum calculation. He was not aware of anyone from his firm contacting the applicant or his counsel to obtain or clarify any details, nor did they have any invoices or statements from the applicant to support the basis of any reported losses. He noted the letter of May 3, 2018, attached to the 2018 T2 Corporate tax return, was a key factor in making the assumption the loss was because of the fire and not accident related.
IRB Quantum
18I find both accounting reports are lacking a correct calculation of the IRB quantum for the period September 4, 2018, to September 1, 2020. Neither report was able to attribute a loss of income to the subject accident. I cannot determine a correct quantum and make a finding based on the evidence provided.
19I find that neither accounting report addressed the post 104-week period from September 2, 2020, (check this date) to March 24, 2021. I do not agree with the applicant’s submission that section 7(2)1ii of the Schedule entitles the applicant to an automatic “default amount” of $185.00 per week. There is text before and after this paragraph that relies on other factors for calculation of post 104-week IRB quantum, especially when “self-employment” may be a factor (as referenced in paragraphs 7(2) 2 and 7(3)(b)).
Conclusion and Order
20The onus is on the applicant to prove the quantum of IRB he is entitled to. Through the admission of his witness, the applicant’s accounting report is not accurate and therefore does not support of a value payable to the applicant. I do not find the applicant has met his burden of proof to show he is entitled to any quantum other than zero.
i. For the period September 11, 2018 (check date), to September 11, 2020, I find the applicant has not met his burden of proof to show he is entitled to any quantum of IRB greater than zero.
ii. For the period post 104 weeks from September 12, 2020 (check date) to March 24, 2021. The applicant’s evidence did not address the quantum of IRB for this period of entitlement. Therefore, I do not have evidence to prove he is entitled to any quantum of IRB greater than zero. I am therefore dismissing the application.
Interest
21As I have not determined a quantum payable, the applicant is not entitled to any interest pursuant to section 51 of the Schedule. Accordingly, the claim for interest is dismissed.
Award
22A special award is tied directly to the benefits in dispute in a particular proceeding. To grant this award I must find that the insurer has “unreasonably withheld or delayed payments” and should I make this finding, the respondent may be required to pay an award up to 50% of the benefits and interest owed. I did not find evidence the respondent acted in a way that would warrant an award, and because I have not determined the applicant is entitled to any amount of benefit in dispute, the claim for an award is dismissed.
Released: March 20, 2023
__________________________
Sandra Driesel
Adjudicator