Botari v. The Dominion of Canada General Insurance Company, 2024 CanLII 61870

Citation: Botari v. The Dominion of Canada General Insurance Company, 2024 ONLAT 22-001245/AABS

Licence Appeal Tribunal File Number: 22-001245/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:

Kenneth Botari Applicant

and

The Dominion of Canada General Insurance Company Respondent

DECISION

ADJUDICATOR: Ulana Pahuta

APPEARANCES:

For the Applicant: Karen N. Vigmond, Counsel

For the Respondent: Tim Crljenica, Counsel

HEARD: By way of written submissions

OVERVIEW

1Kenneth Botari, the applicant, was involved in an automobile accident on February 8, 2019, and sought various benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the "Schedule"). The applicant was denied benefits by the respondent, The Dominion of Canada General Insurance Company, and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the "Tribunal") for resolution of the dispute.

2The issues in dispute in this hearing centre around income replacement benefits ("IRBs"). There is no dispute as to the applicant's disability and whether he meets the test for entitlement to IRBs under the Schedule. Rather, the parties' dispute is over the correct calculation of the quantum of IRBs and whether the respondent is entitled to repayment of IRBs due to an overpayment.

3After the parties filed their submissions for this written hearing, the respondent subsequently filed a Notice of Motion on October 12, 2023 requesting the opportunity to file a sur-reply in response to two new cases cited in the applicant's reply submissions. By way of Motion Order dated October 16, 2023 the Tribunal denied the respondent's request citing the fact that the respondent failed to provide any details of the "two new cases", the relevant context, or why it was necessary for the respondent to respond to these cases. The respondent's request to file a sur-reply was denied.

ISSUES

4The issues in dispute are:

i. Is the applicant entitled to an income replacement benefit in the amount of $400.00 per week from February 15, 2019, to date and ongoing?

ii. Is the respondent entitled to a repayment of $34,285.71 relating to its payment of the income replacement benefit?

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?

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

RESULT

5I find that:

i. The applicant is entitled to IRBs in the amount of $400.00 per week from February 15, 2019, ongoing;

ii. The applicant is entitled to interest in accordance with s. 51 of the Schedule on the IRB payments withheld by the respondent from October 5, 2020;

iii. The respondent is not entitled to a repayment of IRBs due to overpayment; and

iv. The respondent is not liable to pay an award.

ANALYSIS

Background

6The dispute between the parties centres on the applicant's successful wrongful termination grievance against the Ontario Ministry of Labour. Specifically, whether the applicant's reinstatement and resulting retroactive lump sum payment of his wages from 2017 to 2019 should be considered when calculating his IRB quantum.

7At the time of the accident, the applicant was employed with Calian Ltd. working as a civilian driving instructor for the military and was a reserve member with the department of National Defence. The respondent determined that the applicant was entitled to IRBs of $400.00 per week and paid IRBs in this amount until October 5, 2020.

8Prior to 2015, the applicant had been employed with the Ontario Ministry of Labour as a regional Program Co-ordinator. He was placed on paid leave from 2015 to 2017 and was then terminated in 2017. The applicant filed a grievance with the Grievance Settlement Board ("GSB") for wrongful termination, but the grievance process was not completed prior to the February 8, 2019 accident.

9The GSB released its decision on November 22, 2019 allowing the applicant's grievance. The applicant was reinstated to his employment with the Ministry of Labour, although he was ultimately unable to return to the job due to his injuries. The applicant received a lump sum payment, allocated to the 2017, 2018 and 2019 tax years. As a result of the reinstatement the applicant now had access to collateral benefits and was subsequently found to be entitled to long-term disability ("LTD") benefits, retroactive to August 20, 2019 and CPP Disability benefits, retroactive to December 2019. The respondent submits that the applicant continues to receive CPP Disability benefits and LTD benefits totalling over $6,000.00 per month.

10As a result of the applicant's receipt of LTD and CPP Disability benefits, the respondent sent two notices of repayment and recalculation of IRBs. The respondent advised the applicant that due to the receipt of other income replacement assistance, it determined that the quantum of his IRBs was now "nil". By way of letter dated October 5, 2020 the respondent requested repayment of past IRBs in the amount of $23,657.14. On February 3, 2022 the respondent sent another notice of repayment, this time for the amount of $34,385.71.

Competing IRB calculations

11Both parties rely on accounting reports in support of their calculation of the IRB quantum. The applicant relies on the accounting report of ADS Forensics to argue that the quantum of his IRB payment remains at $400.00 per week despite any LTD or CPP Disability payments and that there was no overpayment of IRBs from August 20, 2019 onwards. ADS conceded that there was an overpayment from February 15 to August 19, 2019 in the amount of $10,628 as a result of the retroactive payment the applicant received from the Ministry of Labour for sick pay. However, ADS concluded that the overpayment was no longer recoverable as the period from February 15, 2019 to August 19, 2019 was in excess of 12 months from the date of the notice of repayment (s. 52(3) of the Schedule).

12In calculating the applicant's pre-accident gross employment income, ADS included the pro-rated 2018 retroactive wages from the Ministry of Labour based on the retroactive lump sum breakdown, in addition to the applicant's employment income from Calian and the Department of National Defence. It was determined that the applicant's pre-accident gross weekly employment income from all sources was $2,748.89. The amount of the applicant's weekly LTD and CPP Disability benefits were approximately $1,440.00. As a result, even when the applicant's disability payments were applied, ADS found that the applicant was still entitled to $400.00 in weekly IRB payments.

13The respondent relies on the accounting report of Williams Meaden & Moore ("WMM"). When calculating the applicant's pre-accident employment income, WMM did not include any amounts stemming from the Ministry of Labour's retroactive lump sum payment. Rather, it only considered the applicant's income from the Department of National Defence, Calian Ltd. and employment insurance. As such, the applicant's pre-accident gross employment income was determined to be $1,015.70 per week. When LTD and CPP Disability benefits were applied to the applicant's gross employment income, his weekly IRB entitlement became nil.

14As such, WMM determined that the applicant was not entitled to IRB payments after February 8, 2019. It further concluded that the respondent had overpaid IRBs to the applicant in the amount of $34,285.71.

The applicant's gross employment income for the purposes of IRB calculation includes the retroactive wages from the Ministry of Labour

15I find that the applicant's retroactive salary stemming from his reinstatement pursuant to the November 22, 2019 GSB decision falls under the definition of "gross employment income" in the Schedule.

16The method in which an IRB is calculated is outlined in s. 4 of the Schedule and the first step is to establish an insured's gross annual or weekly income pursuant to s. 4(2) and 4(3) of the Schedule. "Gross employment income" as defined in s. 4(1) of the Schedule includes salary, wages and other remuneration from employment.

17I do not agree with the respondent that the lump sum payment stemming from the November 22, 2019 GSB decision is an award of damages rather than a salary. In its submissions, the respondent argues that the definition of "gross employment income" only considers "salary", "wages" and "other remuneration from employment". It contends that these terms have long-standing meanings related to payment for services in relation to employment. It cites the Court of Appeal decision Peck v. Levesque Plywood Ltd., 1979 CanLII 2055 (ONCA) in support of its claim that an award for wrongful dismissal is not remuneration, but rather damages for breach of contract.

18I find that the GSB decision was clear in stating that the lump sum payment was not an award of damages, but rather, retroactive salary. The November 22, 2019 decision reinstated the applicant to his Ministry of Labour position with no loss of earnings or seniority. The GSB subsequently determined on December 2, 2020 that the parties' Memorandum of Agreement ("MOA") was an enforceable settlement between the parties. This MOA expressly stated that the applicant's gross salary due on reinstatement was $196,220.66, and the salary was to be separately allocated to the 2017, 2018 and 2019 tax years. I find that the GSB decision and MOA were clear and specific in stating that the lump sum settlement payment was applied as a retroactive salary for the years 2017 to 2019.

19Further, the applicant completed a Statement of Qualifying Retroactive Lump-Sum Payment ("QRLSP form") as required by the Canada Revenue Agency for tax purposes. The QRLSP form specifies that while a claimant's returns for prior years will not be reassessed, the applicant could request to be taxed for the prior years as if he received the amounts in those years. The QRLSP form further stipulates that the income indicated on the form had to be reported on information such as a T4 form. I agree with the applicant that this form supports the argument that the retroactive lump sum was applied as a retroactive income for the specified years.

20I am also persuaded by the decisions cited by the applicant, Saunders v. The Queen, 2020 TCC 114 and Tsiaprialis v. R, 2005 SCC 8, which held that in similar circumstances, a lump sum payment was considered to be taxable employment income. In Saunders, the two-part test set out in Tsiaprialis was applied: (i) what was the payment intended to replace; and (ii) would the replaced amount have been taxable in the recipient's hands. The Tax Court of Canada found in Saunders that the lump sum settlement relating to a grievance over over-time pay was taxable employment income and not an award for damages.

21In addition, I note the applicant's argument that the respondent interpreted the Schedule in a manner that permitted it to retroactively deduct LTD benefits the applicant received from his reinstated employment with the Ministry of Labour from the IRB quantum. However, the respondent refused to consider the salary stemming from this employment when calculating IRB quantum. The respondent argues that this position is not inconsistent, as its consideration of LTD and CPP disability benefits was done in accordance with s. 4(1) of the Schedule which defines "other income replacement assistance" in a manner that does not refer to "salary", "wages" or "remuneration" from employment, unlike the definition of "gross employment income". As such, it argues that payment of such disability benefits does not require that it be linked to a salary.

22I am not persuaded by the respondent's argument. Rather, I agree with the applicant that the definition of "other income replacement assistance" references an "income continuation benefit plan". Section 3(7)(d)(ii) clarifies that such a plan includes payments made to persons "employed while the contract for the insurance is in effect". As such, if the respondent was to deduct the applicant's LTD benefits stemming from the Ministry of Labour, he must have been "employed" by the Ministry of Labour. It would be inconsistent to take the position that the applicant was "employed" for the purposes of LTD deductions, but not so "employed" for the purposes of calculating gross employment income. I further agree with the applicant that in order to be "employed" an employee must be paid for their work, thereby receiving a salary or a wage.

The applicant is entitled to weekly IRBs of $400.00

23Given that the applicant's retroactive wages from the Ministry of Labour are included in his pre-accident gross employment income, I find that the applicant is entitled to $400.00 in weekly IRB payments. I accept the findings in the ADS accounting report that when considering the applicant's pre-accident gross weekly employment income from all sources, the quantum of the applicant's IRB payment remains at $400.00 per week despite any LTD or CPP Disability payments. As such, the applicant is entitled to IRB payments of $400.00 per week from February 15, 2019 and ongoing.

24The respondent ceased paying IRBs to the applicant on October 5, 2020. Therefore, the applicant is entitled to payment of the withheld amount of IRBs from October 5, 2020 plus interest in accordance with s. 51 of the Schedule.

The respondent is not entitled to repayment of IRBs pursuant to s. 52 of the Schedule

25Section 52 of the Schedule concerns the repayment of benefits. Under s. 52(1)(a), a person is liable to repay to the insurer any benefit 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.

26Sections 52(2) and (3) provide timelines for repayment requests if a person is liable to repay an amount to an insurer. The insurer shall give the person notice of the amount that is required to be repaid. If the notice required 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.

27Although I found that the applicant is entitled to weekly IRBs in the amount of $400.00 for the period in dispute, the applicant concedes that the respondent did overpay IRBs from February 15 to August 19, 2019 in the amount of $10,628. As a result of the applicant's reinstatement pursuant to the GSB decision, he received retroactive sick pay from the Ministry of Labour between February 15 and August 19, 2019. However the applicant submits that the IRBs paid during this timeframe are no longer recoverable as the period exceeded the 12 month timeline stipulated in s. 52(3) of the Schedule.

28The respondent had provided two notices of repayment, one dated October 5, 2020 and one dated February 3, 2022. In its submissions, the respondent concedes that the repayment request made on February 3, 2022 is irrelevant as no IRBs were paid in the 12 months prior to the request. With respect to the October 5, 2020 notice, in its submissions the respondent clarifies the requested amount of overpayment as being $20,971.43 rather than $23,657.14 as specified in the notice. The respondent acknowledges that pursuant to s. 52(3) of the Schedule, it is limited to overpayment of IRBs from October 5, 2019 to October 5, 2020 rather than from February 15, 2019 to October 5, 2020.

29I find that the respondent has not established entitlement to repayment of IRBs for the period of October 5, 2019 to October 5, 2020. As previously noted, I have found that the applicant was entitled to $400.00 in weekly IRBs from February 15, 2019 onwards. Any period of overpayment is limited to the period that the applicant was in receipt of sick pay, which was from February 15 to August 19, 2019. However, the respondent has acknowledged that it is requesting repayment only for the period from October 5, 2019 to October 5, 2020, when the applicant was no longer receiving sick pay. As such, the respondent has not established that it is entitled to any repayment of IRBs.

Interest

30Interest applies on the payment of any overdue benefits pursuant to s. 51 of the Schedule. The applicant is entitled to interest on the withheld IRB payments from October 5, 2020.

Award

31In the Case Conference Report and Order, one of the listed issues in dispute was an award under s. 10 of Regulation 664. Under s. 10, the Tribunal may grant an award of up to 50 per cent of the total benefits payable if it finds that an insurer unreasonably withheld or delayed the payment of benefits.

32The applicant has not provided any submissions on the issue of an award. Nor was a s. 10 award included as one of his requested orders. Without any submissions on this issue I find that the applicant has not met his burden to prove that he is entitled to an award.

ORDER

33For the foregoing reasons I find that:

i. The applicant is entitled to IRBs in the amount of $400.00 per week from February 15, 2019, ongoing;

ii. The applicant is entitled to interest in accordance with s. 51 of the Schedule on the IRB payments withheld by the respondent from October 5, 2020;

iii. The respondent is not entitled to a repayment of IRBs due to overpayment; and

iv. The respondent is not liable to pay an award.