Citation: Mokrytska v. Certas Direct, 2023 ONLAT 20-013374/AABS

Licence Appeal Tribunal File Number: 20-013374/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:

Tetyana Mokrytska

Applicant

and

Certas Direct

Respondent

DECISION

ADJUDICATOR: Rupinder Hans

APPEARANCES:

For the Applicant: Tetyana Mokrytska, Applicant Kateryna Vlada, Paralegal

For the Respondent: Andrea R. Lim, Counsel

HEARD: In Writing

By way of written submissions

OVERVIEW

1Tetyana Mokrytska, the applicant, was involved in an automobile accident on April 12, 2019, and sought income replacement benefits (“IRBs”) pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”).

2There is no dispute regarding the applicant’s entitlement to IRBs, and the respondent has been paying IRBs to the applicant. Instead, the parties disagree as to the quantum of the IRBs payable to the applicant. The applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

ISSUES

3The issues in dispute are:

i. Is the applicant entitled to IRBs in the amount of $400.00 per week from April 19, 2019 to date and ongoing?

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

RESULT

4I find that the applicant is entitled to IRBs as follows:

i. For the period April 20, 2019 to December 31, 2019, in the amount of $367.00 per week;

ii. For the period January 1, 2020 to April 19, 2021, in the amount of $265.00 per week; and

iii. For the period April 20, 2021 to date and ongoing, in an amount not in excess of $10.60 per week.

5The applicant is not entitled to interest on any overdue payment of benefits.

ANALYSIS

The applicant is not entitled to an income replacement benefit in the quantum of $400.00 per week

6I find the applicant is not entitled to an IRB in the quantum of $400.00 per week for the period of April 19, 2019 to date and ongoing as sought. The applicant bears the onus, on the balance of probabilities, to prove her entitlement to the quantum of $400.00 weekly for the period in question. She has not met her onus.

7The calculation of IRB payments is outlined in section 4 of the Schedule. Section 4(3) applies to those who claim IRBs only on income from self-employment as outlined in section 5(1)2. Section 4(3) further provides that a self-employed person’s weekly income or loss from self-employment at the time of the accident is the amount that would be 1/52 of the amount of the insured’s income or loss from the business for the last completed taxation year. Pursuant to section 4(5) of the Schedule, IRBs are based on the applicant’s income as reported to the Canada Revenue Agency (“CRA”). Generally speaking, for self-employed persons, weekly IRB payments are 70% of the gross weekly income from self-employment.

8I find the applicant is subject to section 4(3) as the applicant’s gross annual income is based on self-employment. The parties agree that, at the time of the accident, the applicant was the self-employed owner of a pet day-care and grooming business, Tanya’s Pet Hotel and Spa.

9The applicant relies on various financial documents she produced throughout the adjustment of her claim in support of her position that she is entitled to an IRB at the rate of $400.00 per week, including but not limited to, notice of assessment for HST, invoices, bank statements, 2019 tax summary, her spouse’s paystubs, post-accident invoices, notice of assessment and taxes for 2019, various tax filings and correspondences. She also submitted an employer’s confirmation form (OCF-2) which indicated her gross annual income prior to the accident was $67,151.86, and she is self-employed on a full-time basis. The applicant also hired an independent accounting firm, Colangelo Greenhow, to calculate her lost income, and she relies upon the Colangelo Greenhow income replacement benefits report, dated October 25, 2019 (the “CG Report”), in support of her calculations.

10The respondent obtained its own accounting reports from BDO, the October 6, 2020 report, and the December 11, 2020 report (the “December BDO Report”) based on updated information provided by the applicant.

11The respondent submits that although both the CG Report and the December BDO Report base the IRB calculation on the 52 weeks before the accident as it is greater than the last fiscal year for the applicant, there are several inaccuracies in the CG Report. I note that a difference between the CG Report and the December BDO Report is with respect to the applicant’s 2019 income tax returns, which BDO relied upon for a more accurate account of revenue and expense amounts, but the CG Report did not. I agree with the position of the respondent and I found its arguments persuasive. I do not agree with the applicant that the respondent’s calculations and reliance on its own reports is erroneous.

12I note that there are several differences in the CG Report when compared to the December BDO Report in calculating the IRB quantum. First, in schedule 2.3 of the CG Report, the accountants took the 52 week period for 2018 and 2019 and pro-rated the applicant’s expenses for the period of April 13, 2018 to December 31, 2018, based on estimated handwritten total expenses for 2018, which directly affected the calculation of the IRB quantum. The respondent submits that this is an inaccurate assumption as there was nothing objective provided by the applicant to substantiate her estimated total expenses for this period. By contrast, the December BDO Report left schedule 2 for the same period blank since BDO was not provided with the actual expenses for this period of time.

13Second, the CG Report, in schedule 2.3, relied on estimated revenue for January 1, 2018 to April 12, 2018 of $10,489.00, which is based on the applicant’s handwritten notes for revenue and expenses from April to December 2018. The respondent submits that nothing was provided to support the estimated expenses for the period from January 1, 2018 to April 12, 2018. The respondent submits that the estimated $10,489.00 revenue does not make sense as the CG Report included a net income loss of $9,621.00 for the same period. In addition, the CG Report applied broadly a split ratio of expenses for the period of January 1, 2018 to April 12, 2018 and from April 13, 2018 to December 31, 2018, based again on the applicant’s handwritten estimated expenses for only the period April to December, 2018. By contrast, the December BDO Report, in schedule 2, applied the revenue and expenses reported in the applicant’s 2018 CRA income tax return, notice of assessment, statement of business activities for January 1, 2018 to December 31, 2018, with an annual loss of income reported of $1,641.00.

14Third, the CG Report, at schedule 2.3, assumed that the applicant’s revenue for a four month period of January 1, 2019 to April 11, 2019 resulted in revenue of $32,524.06, which is again based upon the applicant’s handwritten notes of revenue and expenses, and not based on the CRA income tax return summary, statement of business activities, and notice of assessment for 2019, all of which reflect sales and revenue of $28,782.35 for 2019, a difference of approximately $3,741.65. By contrast, the December BDO Report relied upon the 2019 CRA income tax return, statement of business activities and notice of assessment, including reported expenses and losses.

15The respondent persuasively submits that the applicant’s submissions provide no explanation for why its accounting firm did not subsequently review the 2019 CRA income tax returns, statement of business activities and notice of assessment, all of which should have been taken into consideration in calculating the IRB quantum.

16I prefer the December BDO Report over the CG Report given its reliance on the applicant’s actual CRA income tax returns, statement of business activities and notices of assessment versus the applicant’s reliance, at times, on estimation of expenses. I find that the CG Report‘s reliance on estimation of the applicant’s expenses without objective proof of expenses is not reliable and as accurate. I prefer to rely upon the applicant’s actual reported revenue and losses over possible estimations.

17I further note that in her submissions, the applicant did not address the calculation of the quantum after the applicant reached the age of 65 years on April 25, 2020. The CG Report does make mention of the adjustment but sufficient and convincing details are not provided. Under section 8(1) of the Schedule, if a person is receiving an IRB immediately before his or her 65th birthday, the weekly amount is adjusted, on the later of the day of the person’s 65th birthday and the second anniversary of the day the person began receiving the benefit, to the amount determined in accordance with the following formula: C x 0.02 x D. Where “C” is the IRB before deducting post-accident income and “D” is the lesser of 35 and the number of years during which the applicant qualified for IRBs before the adjustment is made.

18In this case, the later date is April 20, 2021, the second anniversary of the day she was entitled to receive IRBs.

19I accept the respondent’s calculations for the quantum payable after April 20, 2021. The respondent applied the correct formula of C x 0.02 x D as follows: $265.00 (weekly amount of IRB the applicant was entitled to receive immediately before age 65) x 0.02 x 2 (number of years the applicant qualified for the IRB before age 65) = $10.60 per week. In accordance with the Schedule, the respondent has been paying the applicant the IRBs at the ramp down rate of $10.60 per week on a bi-weekly basis. I find the respondent’s calculation of the IRB quantum pursuant to section 8(1) of the Schedule to be correct.

20Overall, I find that the applicant has not established, on a balance of the probabilities, that she is entitled to IRBs at a quantum of $400.00 per week for the period April 19, 2019 to date and ongoing.

The applicant is not entitled to any interest

21I find that no interest is owing on any overdue payment of IRBs.

22Interest applies on the payment of any overdue benefits pursuant to s. 51 of the Schedule. As I have found that no additional IRB amounts are owing beyond what has already been paid by the respondent, there is no interest owing.

23In addition, I note that in her submissions the applicant asserts that the respondent delayed payment of the IRBs. She asserts that the respondent did not issue any IRB payments until October 9, 2020 in the amount of $3,370.00, which is 18 months after the accident and the initial payment only covered the period April 20, 2019 to December 31, 2019. Subsequently, the respondent made an additional payment of $20,933.66 for the period April 20, 2019 to November 26, 2020 and erroneously failed to forward another $1,289.34. The respondent acknowledged its error and $1,289.34 was paid shortly thereafter.

24The respondent submits that it paid IRBs to the applicant after the first week of the accident, being April 20, 2019. The respondent submits that it wrote to the applicant on April 26, 2019 and again on November 26, 2019, requesting a number of documents, including the copies of the applicant’s income tax returns, notices of assessment, HST returns and expenses. In the later correspondence, the respondent advised that if such information was not provided in 10 business days, then the IRBs would be stopped until receipt of the information as provided in section 33(6) of the Schedule. The respondent submits that it wrote the applicant’s representative on 11 occasions between June 19, 2019 and November 19, 2020, requesting income information, documentation and clarification regarding information received in order to properly calculate the IRB quantum.

25The respondent submits the applicant was notified that the IRB would be suspended pending receipt of the requested income information/documentation and that section 33(6) of the Schedule would apply and interest would not be owing for any period prior to the requested documentation being provided.

26I would agree with the position of the respondent that it acted well within the purview of section 33(6) of the Schedule when it suspended payment of the IRBs pending receipt of the requested income information. I find no interest is owing in this regard.

27I find the applicant has not established, on a balance of probabilities, that she is entitled to interest on any overdue payment of benefits.

ORDER

28After considering the evidence and submissions, I find that the applicant is entitled to IRBs as follows:

i. For the period of April 20, 2019 to December 31, 2019, in the amount of $367.00 per week;

ii. For the period of January 1, 2020 to April 19, 2021, in the amount of $265.00 per week; and

iii. For the period of April 20, 2021 to date and ongoing, in an amount not in excess of $10.60 per week.

29The applicant is not entitled to interest on any overdue payment of benefits.