Licence Appeal Tribunal File Number: 22-000176/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:
Security National Insurance Company
Applicant
and
Aklilu Thomas
Respondent
AMENDED DECISION
ADJUDICATORS:
Kevin F Lundy and Bernard Trottier
APPEARANCES:
For the Applicant:
Security National Insurance Company, Applicant
Marie-Pier Couturier, Counsel
Rickey Ricky Shen, Counsel
For the Respondent:
Aklilu Thomas, self-represented
Heard By Videoconference:
October 12, 2023
Followed by Written Submissions
OVERVIEW
1Security National Insurance Company, the applicant, paid an income replacement benefit (“IRB”) to Aklilu Thomas, the respondent, with respect to an automobile accident that occurred on June 1, 2018, and sought partial repayment of benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”). The applicant applied to the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.
2At the time of the accident, the respondent was employed as a product verifier/order picker at Bite Beauty, through a contract with Ranstad Interim Inc. The respondent applied for an IRB via an Application for Accident Benefits submitted on June 29, 2018. The applicant paid an IRB of $356.22 per week from June 7, 2018 to April 27, 2021, for a total of $52,798.14 over a period of approximately 35 months.
3The applicant sought repayment of IRBs $10,847.17 for the period from June 14, 2018 to April 27, 2021 in its filing to the Tribunal on January 7, 2022. A case conference with the Tribunal was held on October 31, 2022, where the parties negotiated a settlement agreement. In the settlement agreement, executed on November 3, 2022, the respondent agreed to pay the applicant $6,000.00, to be paid in installments of $500.00 per month over 12 months, to settle the file on a full and final basis. The respondent subsequently defaulted on the terms of the settlement agreement and the applicant re-opened the Tribunal file via a Motion Order dated March 21, 2023.
4The Motion Order called for a one-day oral hearing, which was held on October 12, 2023, followed by written submissions from the parties.
ISSUES
5The issues in dispute are:
i. Is the applicant entitled to repayment of income replacement benefits in the amount of $10,847.17 for the period of June 14, 2018 to April 27, 2021?
ii. Is the applicant entitled to interest on any overdue amount?
iii. In addition to the above issues, the applicant is seeking costs against the respondent in the amount of $500.00.
RESULT
6The applicant is entitled to repayment of the IRB paid to the respondent in the amount of $10,847.17.
7The applicant is entitled to interest on any overdue amount.
8The applicant is not entitled to $500.00 in costs.
PROCEDURAL ISSUES
9At the videoconference hearing, the applicant raised a procedural issue that the respondent did not comply with a production order from the Tribunal’s Motion Order of March 21, 2023, ordering the respondent to produce copies of Uber Canada Inc. (“Uber”) earnings summaries from June 1, 2018 to April 30, 2021, Canada Revenue Agency (“CRA”) Statements of Business Activities for Driver for 2018 to 2021, and a sworn statutory declaration clarifying the source of “other income” in the respondent’s 2020 Income Tax Return.
10The applicant raised a second procedural issue at the videoconference hearing, namely that the respondent did not submit a document brief prior to the hearing.
11The applicant asks the Tribunal to draw an adverse inference from these non-actions.
12On the first procedural issue, we note the respondent’s non-compliance with the Tribunal’s Motion Order and will assign weight to the parties’ submissions accordingly.
13The second procedural issue is only relevant to the extent that the respondent is submitting any documents into evidence or referring to any case law at the oral portion of the hearing. We note that written submissions, including evidence and case law, will be made following the oral hearing, and that documents may be submitted by the respondent at that time.
ANALYSIS
The respondent misrepresented his income status while receiving an IRB
14We find that the respondent misrepresented his work and income status while receiving an IRB between June 14, 2018 and April 27, 2021. As a result, the applicant is entitled to a partial repayment of the IRB that was overpaid to the respondent.
15Section 7(3)(b) of the Schedule states that an insurer may deduct 70 per cent of any income from self-employment earned by the insured person after the accident and during the period in which he or she is eligible to receive an income replacement benefit.
16Section 52(1) of the Schedule states that a person is liable to repay to the insurer any benefit described in this Regulation that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of wilful misrepresentation or fraud.
17The burden of proof lies with the applicant to prove entitlement to repayment of the IRB, on a balance of probabilities.
18The applicant submits that in the respondent’s Application for Accident Benefits (OCF-1), submitted on June 29, 2018, the respondent indicated that he was employed only at Bite Beauty, with no other employers or self-employment listed under Part 8 (Income Replacement Determination) of his application.
19The applicant indicates further that the respondent submitted four Disability Certificates (OCF-3s), on July 27, 2018, June 25, 2019, October 25, 2019 and May 28, 2020, where the respondent indicated he was not working and that the last date worked was June 14, 2018 on each of the OCF-3s.
20The respondent attended an insurer’s examination (“IE”) on April 27, 2021, where he stated to the IE assessor that he had been working as a food delivery driver with Uber and SkipTheDishes, working approximately 8 hours per week on an occasional basis. In light of that information, the respondent’s IRB payments were stopped on April 27, 2021.
21The respondent provided the applicant with copies of his 2019 Uber Tax Summary and his 2018 to 2021 SkipTheDishes earnings summaries, as well as CRA Income Tax Returns and Notices of Assessment, from 2017 to 2020. The applicant engaged PricewaterhouseCoopers (“PwC”) to calculate the amount of overpaid income replacement benefits, and the applicant submits that PwC calculated the respondent’s net income as a self-employed driver from September 21, 2018 to December 31, 2018 as $2,688.00, and from January 1, 2019 to December 31, 2019 as $14,137.00. In its report, dated March 30, 2022, PwC calculated the overpayment of IRB from June 14, 2018 to April 27, 2021 to be $11,347.17.
22The settlement agreement of November 3, 2022 indicated that the respondent would repay the applicant $500.00 per month, to a total of $6,000.00, starting in January 2023, and that would settle the file on a full and final basis. The applicant made an initial repayment of $500.00 in February 2023, and then defaulted on subsequent payments. The settlement agreement stipulated that the applicant reserved its rights to pursue further adjudication of this matter if the respondent breached his contractual terms related to timely repayments.
23The amount of repayment sought by the applicant is $11,347.17 less the initial $500.00 repayment, or $10,847.17.
24The applicant submits that the Tribunal has defined “misrepresentation” as “any manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts.” The applicant also submits that the Tribunal has held that “silence or a failure to report” can constitute wilful misrepresentation, citing Subaskaran v RSA Insurance (2021 CanLII 53173 ON LAT).
25The applicant submits that the respondent misrepresented his work status by filing misleading and misrepresentative OCF-3s during the period in which he was receiving IRBs, and that these OCF-3s indicated that he had not returned to work. The respondent argues that the respondent failed to notify the applicant that he had returned to work as a self-employed driver while collecting IRBs, which would have reduced the IRB paid as permitted under s. 7(3) of the Schedule.
26The applicant submits that the respondent’s misrepresentation of his employment status was wilful and deliberate. The applicant submits further that the Tribunal has held that, even if the Tribunal were to find that the respondent’s failure to report his employment status were inadvertent, he failed to rectify the error for over two and a half years (from September 2018 until April 2021) despite having legal representation throughout that period. The applicant submits that the respondent would be liable to repay the IRB overpayment even in the case of inadvertence, citing Prabha Rajendrakumar v. Aviva Canada Inc. (2017 ONFSCDRS 287.)
27The respondent submits that he did not misrepresent his income to the applicant, since he became fully disabled by the accident and that he was committed to rehabilitation. In his oral testimony, the respondent submitted that he only made deliveries to check his ability to drive, in line with recommendations from his treating physiotherapist.
28The respondent submits that during the time period of the IRB payments, he was a full-time student at three post-secondary institutions, including York University, Humber College and a computer college. He indicated that he was also volunteering as a grant writer.
29The respondent submits that whatever income he made as a part-time driver went to fuel, vehicle insurance and maintenance, and that the amounts of net earnings indicated on his Uber and SkipTheDishes summaries were far less than the amounts indicated.
30The respondent submits that he was not trying to mislead the applicant or the Tribunal. He submits that when he indicated on the OCF-3s that he had not returned to work, he interpreted that to mean that he had not returned to his previous full-time job at Bite Beauty as an order picker. The respondent submits that his failure to report his earnings as a part-time driver was “a misunderstanding” since he was not aware of the regulations in Canada and that he was not advised by his lawyer at the time of the need to report part-time self-employment income. The respondent submits that at no time did he deny that he had some income as a part-time driver. Rather, he submits that he did not know there was a need to declare self-employment income and, since the amounts were small, it was not necessary to report it.
31The respondent submits that he was not aware of the order for document productions from the Motion Order of March 21, 2023, since his lawyer no longer represented him and that he had not read the Motion Order.
32The respondent submits that financial hardship made it impossible for him to satisfy the terms of the settlement agreement of November 3, 2022. The respondent submits that the applicant denied payment of $8,900.00 to his physiotherapy clinic as part of the settlement and that this amount was still owed to the clinic. He submits that because of the injury to his shoulder, he could not find work for which he was qualified. In addition, he was looking after his family who recently settled in Canada from overseas, which increased his domestic expenses. The respondent submits that he tried to borrow funds but that he could not get a loan approved. The respondent submits that he could not afford to repay the $6,000.00 that was agreed upon in the settlement agreement, much less the $10,847.17 that was requested in the application. The respondent submits that he only agreed to settle the file for $6,000.00 on the advice of this lawyer at the time.
33In his written submissions, the respondent argues that there should be no order from the Tribunal against him because of financial hardship and impecuniosity (inability to repay.) The respondent argues that his impecuniosity arose from “unforeseen circumstances” including (1) mechanical issues related to his vehicle, (2) the COVID-19 pandemic and (3) his family’s immigration to Canada in 2022. He argues further that his ongoing Type II diabetes imposes an uninsured burden of $150 per month, and that his shoulder dislocation suffered in the accident makes it difficult for him to make extra income from delivery. He argues that the repayment terms of the November 2022 settlement agreement were overly restrictive, making it impossible for him to obtain loans.
34In its reply submissions, the applicant argues that impecuniosity is immaterial to the matter in dispute. The applicant argues that, in any event, the respondent has not provided any evidence to corroborate his claim of impecuniosity. Finally, the applicant argues that impecuniosity is not a defence to overpayment as a result of wilful misrepresentation, and that the respondent’s written submissions do not dispute that an overpayment was made due to wilful misrepresentation.
35We find that the applicant has met its burden of proof, on a balance of probabilities, that the respondent must repay $10,847.17 of IRBs paid to the respondent between June 14, 2018 and April 27, 2021, in accordance with Sections 7(3)(b) and 52(1) of the Schedule. We agree with the applicant’s argument that the respondent misrepresented his income status while receiving IRBs. We disagree with the respondent’s argument that he was not aware of the requirement under the Schedule to report his part-time self-employment earnings. We note that the respondent had legal representation from the date that he filed his initial OCF-1 (June 29, 2018) until the date of the settlement agreement on November 3, 2022. In any event, we cannot accept ignorance of the Regulation as a defence.
36We find the applicant’s argument with respect to the quantum of the repayment persuasive, on a balance of probabilities. We note that the applicant and its accountant relied on delivery income and earnings documents provided by the respondent and made assumptions for fixed and variable operating expenses in calculating the respondent’s net earnings from delivery activities. In his submissions, the respondent made qualitative reference to operational costs but provided no quantitative submissions or evidence. In the absence of evidence to refute the applicant’s net earning cost calculations, and the respondent’s failure to provide the documents ordered in the Tribunal’s Motion Order of March 21, 2023, we find the applicant’s earnings calculations persuasive.
37We find that the respondent’s argument for impecuniosity is not a valid reason to dismiss the application. We agree with the applicant’s argument that the comments in Myers v. Metropolitan Toronto Chief of Police (1995 CanLII 11086 ON SCDC) are instructive, in that the courts and the Tribunal should avoid “a situation in which litigants without means can ignore the rules of the court with impunity, and the distastefulness of creating a rule incapable of consistent application.”
38For the reasons above, we find on a balance of probabilities that the applicant is entitled to a repayment of $10,847.17 of IRBs.
The respondent provided proper notice of its intention to seek repayment
39Section 52(2)(a) of the Schedule states that the insurer shall give the person notice of the amount that is required to be repaid.
40Section 53(3) of the Schedule states that if the notice required under subsection (2) is not given within 12 months after the payment of the amount that is to be repaid, the person to whom the notice would have been given ceases to be liable to repay the amount unless it was originally paid to the person as a result of wilful misrepresentation or fraud.
41The applicant made several requests of repayment to the respondent, on April 28, 2021, July 5, 2021 and August 27, 2021 after it had become aware of the overpayment. On December 20, 2021, the respondent provided the applicant with copies of his 2019 Uber Tax Summary and 2018 to 2021 SkipTheDishes earnings summary.
42After PwC produced its accounting report, the applicant sent two notice letters to the respondent, on April 14, 2022 and July 6, 2022, requesting an IRB repayment of $11,347.17. The respondent made no payments at that time but agreed to repay $6,000.00 in the later settlement agreement executed on November 3, 2022.
43The applicant requested repayment under the terms of the settlement agreement in letters sent to the respondent on January 27, 2023 and February 23, 2023.
44In its letters to the respondent, the applicant described the reasons for repayment, the amounts to be repaid, the relevant sections of the Schedule and the benefits at issue.
45We find that the applicant’s notices of repayment are compliant with the requirements of the Schedule. Since we found that the respondent wilfully misrepresented his income while he was receiving an IRB, he does not cease to be liable for repayment due to the notices being issued more than 12 months after some of the IRB was paid.
46The respondent did not make submissions that the repayment notices were not in compliance with the Schedule.
47Since the we find on a balance of probabilities that the notices for IRB repayment complied with the Schedule, we find that the applicant is entitled to a repayment of $10,847.17 of IRBs.
The applicant is entitled to interest on overdue amounts owed
48Section 52(5) of the Schedule states that the insurer may charge interest on the outstanding balance of the amount to be repaid for the period starting on the 15th day after the notice is given under s. 52(2) and ending on the day repayment is received in full, calculated at the bank rate in effect on the 15th day after the notice under s. 52(2) is given.
49According to the s. 52(6) of the Schedule, the “bank rate” indicated above means the bank rate established by the Bank of Canada as the minimum rate at which the Bank of Canada makes short-term advances to the banks listed in Schedule I to the Bank Act (Canada).
50The applicant seeks interest on any outstanding repayment beginning on April 29, 2022 (the 15th day from the applicant's notice letter dated April 14, 2022.)
51Since we have found that the respondent is entitled to repayment of IRBs, and that notice of repayment was provided in accordance with the Schedule, the applicant may charge interest on overdue amounts owed in accordance with s. 52 of the Schedule.
The applicant is not entitled to an award for costs
52In addition to a repayment of IRBs and interest, the applicant sought an award for costs due to unnecessary delay and expenditure for the applicant and for the Tribunal.
53Pursuant to r. 19.4 of the Tribunal’s Common Rules of Practice and Procedure (the "Rules"), submissions on costs shall set out the reasons for the request and the particulars of the other party’s conduct that are alleged to be unreasonable, frivolous, vexatious, or in bad faith.
54Pursuant to r. 19.5 of the Rules, in deciding whether to order costs and the amount of costs to be ordered, the Tribunal shall consider all relevant factors including: the seriousness of the misconduct; whether the conduct was in breach of a direction or order issued by the Tribunal; whether or not a party’s behaviour interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process; prejudice to other parties; and the potential impact an order for costs would have on individuals accessing the Tribunal system.
55The applicant submits that the respondent’s failure to comply with the Motion Order of March 21, 2023 is in breach of an Order by the Tribunal, and that the failure to provide documents has prejudiced the applicant’s ability to pursue further repayment which may be owed.
56The applicant further submits that the respondent’s non-compliance with the Motion Order has interfered with the Tribunal’s ability to carry out a fair and efficient process.
57Finally, the applicant submits that the respondent agreed to settle with no intention to repay the applicant, resulting in unnecessary delay and expenditure to the Tribunal’s adjudicative resources by requiring a motion to be heard to restore the hearing and lengthening the hearing process.
58The respondent made no submissions specifically with respect to an award for costs.
59We find that the respondent’s non-compliance with the Motion Order of March 21, 2023 does not meet the standard of being unreasonable, frivolous, vexatious, or in bad faith. In the absence of the requested information to calculate the quantum of IRBs, the applicant’s accounting firm, PwC, made certain assumptions regarding fixed and variable costs associated with providing delivery services. These assumptions were uncontested by the respondent and the hearing was able to proceed.
60Regarding the Motion Order’s request for a statutory declaration regarding “other income” reported in 2020, PwC opines in its report that this would have been Canada Emergency Response Benefits (“CERB”) payments. PwC opines further that according to the applicant’s own guidance and the Tribunal’s direction established in the Tribunal’s reconsideration decision in Foster v Aviva General Insurance Company (2021 CanLII 117413 ON LAT), CERB payments should not be considered in the calculation of IRB. As such, the respondent’s non-compliance with this aspect of the Motion Order was not material.
61As to the assertion that that the respondent had no intention to repay the applicant, we find this assertion speculative. We note that the respondent made an initial repayment of $500.00 in February 2023 which indicates to us that the settlement agreement was executed in good faith.
62For the reasons above, we do not find that the respondent’s conduct meets the standard of being unreasonable, frivolous, vexatious, or in bad faith as described in the Rules. Accordingly, we decline to award costs against the respondent.
ORDER
63The applicant is entitled to repayment of the IRB paid to the respondent in the amount of $10,847.17.
64The applicant is entitled to interest on any overdue amount.
65The applicant is not entitled to $500.00 in costs.
Released: January 16, 2024
__________________________
Kevin F Lundy
Adjudicator
__________________________
Bernard Trottier
Adjudicator