Zhu v. Allstate Insurance Company of Canada, 2025 CanLII 61180

Citation: Zhu v. Allstate Insurance Company of Canada, 2025 ONLAT 23-008184/AABS

Licence Appeal Tribunal File Number: 23-008184/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:

Mao Lin Zhu

Applicant

and

Allstate Insurance Company of Canada

Respondent

DECISION

ADJUDICATOR: Rachel Levitsky

APPEARANCES:

For the Applicant: Ryan Olson, Paralegal

For the Respondent: Diana Oliveira, Counsel

HEARD: By way of written submissions

OVERVIEW

1Mao Lin Zhu, the applicant, was involved in an automobile accident on October 26, 2022, and sought 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, Allstate Insurance Company of Canada, and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

ISSUES

2The issues in dispute are:

i. What is the quantum of the income replacement benefit (“IRB”) that the applicant is entitled to receive?

ii. Is the respondent liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant?

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

RESULT

3The quantum of IRBs payable for the first 104 weeks of disability is $38.00 per week.

4The applicant is entitled to interest pursuant to s. 51 on the IRBs paid for the period of January 30, 2023, to April 2, 2024.

5The respondent is not liable to pay an award.

ANALYSIS

Quantum of Income Replacement Benefit

6I find that the quantum of IRBs payable for the first 104 weeks of disability is $38.00 per week.

7The applicant submits that she is entitled to IRBs in the amount of $268.76 per week. She relies on the report of Ms. Ying Yang from Green Fortune Accounting Corporation dated September 21, 2023. Ms. Yang’s calculations were based on the applicant’s gross income for the last 52 weeks prior to the accident.

8The respondent submits that the applicant is entitled to $38.00 per week. It relies on the report of Janet Olsen and Richard Cameron from KPMG LLP dated March 21, 2024. Their calculations were based on the applicant’s income during her last fiscal year.

9In order to calculate IRBs, the applicant’s income must be established pursuant to s. 4(2) and 4(3). Section 4(2) explains how to calculate the gross annual employment income of an insured person. Under s. 4(2)2, a person’s gross annual employment income is their gross employment for the 52 weeks before the accident if:

i. The person qualifies for a benefit under s. 5(1)1(i) and was a self-employed person at any time during the four weeks before the accident, or;

ii. The person qualifies for a benefit under s. 5(1)1(ii).

10Section 4(2)3 states that if the person described in s. 4(2)2(i) was self-employed for at least one year before the accident, they may designate as their gross annual employment income the amount of their gross employment income during the last fiscal year of the business that ended on or before the day of the accident.

11Section 5(1)1(i) states that an insurer shall pay an IRB to an insured person as long as the insured person “was employed at the time of the accident”. Section 5(1)1(ii) entitles insureds who were not employed at the time of the accident to IRBs, so long as they were employed for at least 26 weeks during the 52 weeks before the accident or were receiving benefits under the Employment Insurance Act at the time of the accident.

12Section 4(3) states 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 their income or loss from the business for the last completed taxation year as determined in accordance with Part I of the Income Tax Act.

13The applicant submits that s. 4(2) is applicable to her case. She argues that the word “may” in s. 4(2)3 should be interpreted as providing her with the option to choose to use either the last 52 weeks or the last fiscal year to calculate the IRB quantum. She also submits that the OCF-2 form allows a self-employed applicant the option to choose to calculate the quantum based on the last fiscal year or the last 52 weeks. She argues that as the Schedule is consumer protection legislation, and as she was unable to work for the majority of 2021 due to the pandemic, an inflexible interpretation of s. 4(2)3 would lead to an unjust and unfair result if the respondent could avoid paying IRBs because of the pandemic.

14I disagree with the applicant’s interpretation of the Schedule. In order for s. 4(2)2 or 4(2)3 to apply to the applicant, she would also have to satisfy the requirements of s. 5(1)1(i) or s. 5(1)1(ii) – specifically, she would have to be employed or recently employed in the time preceding the accident. The evidence is that the applicant was self-employed prior to the accident, and there is no evidence before me that she was employed by anyone. Her 2021 income tax return indicates that she earned $2,920.00 in gross business income ($2,496.93 net) and received $14,000 in CERB as a result of the Covid-19 pandemic. Her 2022 income tax return indicates that she earned $20,000.00 in gross business income ($19,520.00 net). No employment income was reported on either tax return. At no point does she suggest in her submissions that she was employed by anyone in addition to her self-employment.

15I am not persuaded that the options provided in the OCF-2 would supplant the method of calculation prescribed in the Schedule. The applicant has not directed me to any authority for that proposition.

16Further, while I am alive to the consumer protection mandate of the Schedule, in my view there is no ambiguity as to the wording of s. 4(2) and 4(3) that would allow me to interpret those sections differently. A self-employed person’s IRBs are calculated in accordance with s. 4(3) unless they were also employed (or recently employed) prior to the accident, in which case s. 4(2) would apply.

17As the applicant was self-employed in the time preceding the accident, her IRB should be calculated in accordance with s. 4(3) by utilizing her income from 2021, the last completed taxation year prior to the accident. I accordingly find that Ms. Yang’s calculations are incorrect as she utilized the applicant’s 2022 income. As KPMG’s report calculated the IRB based on the applicant’s income from 2021, and the applicant did not make any other submissions with respect to KPMG’s calculations, I accept KPMG’s finding that the quantum of the IRB was $38.00 per week.

18Section 7(2)1(ii) of the Schedule specifies that after the first 104 weeks of disability, there is a change to the weekly base amount of IRBs payable. I note that in a motion order from March 13, 2024, the issue in dispute was framed as “what is the quantum of income maintenance benefit the applicant is entitled to receive”. It does not specify a particular time period. Where an issue is not precisely defined, the Tribunal must look to the hearing record to understand the dispute the parties have actually placed before it for adjudication.

19In this proceeding, the parties’ submissions did not address the quantum of IRBs after 104 weeks. As no evidence or argument was presented by either party on the quantum of benefits for the post-104-week period, I am satisfied that the dispute before me is confined to the quantum of benefits prior to 104 weeks.

Interest

20Interest applies on the payment of any overdue benefits pursuant to s. 51 of the Schedule. The applicant submits that on April 2, 2024, the respondent advised that it would be providing a cheque for $2,812.00 for IRBs payable between November 3, 2022, and April 4, 2024. However, she submits that interest was not included with this payment.

21The respondent submits that the applicant is not entitled to interest on the IRBs paid, as that is not an issue in dispute and therefore the Tribunal accordingly does not have jurisdiction to address this. I disagree. Determining whether the applicant is entitled to interest falls squarely within the Tribunal’s jurisdiction. Section 51(1) states that an amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under the Schedule. It does not state that Tribunal must first find the benefit itself to be payable in order for the applicant to be entitled to interest. Further, the applicant’s entitlement to interest on any overdue payment of benefits was one of the issues in dispute articulated in the Case Conference Report and Order of February 13, 2024. The issue as framed was not limited to a particular benefit or dependent on a particular outcome.

22The respondent also submits that the applicant is not entitled to interest as she delayed providing the documents required to calculate the benefit until March 2024. It argues that it had the right to refuse to make IRB payments until it had all the information required to complete its assessment.

23Section 36(4) of the Schedule states that within 10 business days after the insurer receives the application and completed disability certificate (OCF-3), the insurer shall pay the specified benefit, provide notice explaining why the insurer is not paying the benefit or advising the insured of the requirement for an examination under s. 44, or send a request under s. 33. Section 33 requires the insured to provide the insurer with any information reasonably required to assist the insurer in determining the applicant’s entitlement to a benefit.

24The parties disagree as to when the OCF-3 was submitted. The applicant argues that it was sent via fax on January 16, 2023, and the respondent submits that it did not receive the OCF-3 until it was re-faxed on January 26, 2024. I have reviewed both fax confirmation pages and it appears that both faxes were sent to the same number, and both transmissions were successful. The respondent has not explained why it would not have received the fax on January 16, 2023, despite receiving it on January 26, 2024. I find that the fax confirmation is sufficient evidence that the respondent received the OCF-3 on January 16, 2023.

25On April 26, 2023, the respondent requested an OCF-3 and several medical records pursuant to s. 33, although none of the requests were financial in nature, and the request did not specify that the documents were required in order to determine the applicant’s entitlement to IRBs. Instead, the letter explained that these documents were being requested to determine the applicant’s entitlement to medical benefits. It made a similar request on May 26, 2023. On November 14, 2023, the applicant provided the respondent with Ms. Yang’s IRB report, and the applicant’s T1 tax forms from 2021 and 2022. The applicant re-sent the initial OCF-3 on January 26, 2024, and subsequently sent a second OCF-3 dated February 7, 2024. It was not until February 22, 2024, that the respondent provided the applicant with notice indicating that it had requested a calculation of her IRB, and would advise her of the quantum. On March 1 and 22, 2024, counsel for the respondent followed up on his requests for financial productions. KPMG’s report was generated on March 21, 2024, and the respondent advised on April 2, 2024, that a cheque for the benefit would follow.

26I find that the respondent failed to comply with s. 36(4) after it received the OCF-3 on January 26, 2023. I am accordingly satisfied that it failed to pay the benefit within the time required under the Schedule, and the benefit was therefore overdue. As such, I find that the applicant is entitled to interest pursuant to s. 51(3) on the benefit that was payable from January 30, 2023, ten business days after the respondent received the OCF-3, to the date that the overdue benefit was paid, which the applicant advised is April 2, 2024.

Award

27The applicant sought an award under s. 10 of Reg. 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. The Tribunal has determined that an award is justified where the delay or withholding of benefits by the insurer is unreasonable conduct, meaning “behaviour, which is excessive, imprudent, stubborn, inflexible, unyielding, or immoderate.” The onus is on the applicant to prove, on a balance of probabilities, that the respondent’s conduct meets these criteria.

28The applicant argues that the respondent delayed payment of the IRB until April 2, 2024, and never requested or relied upon a medical opinion to deny or withhold it. She submits that she is entitled to 50% of the unreasonably withheld and delayed IRBs.

29It is settled law that insurers are not held to a standard of perfection, and an award should not be ordered simply because an insurer made an incorrect decision or a mistake. The applicant has not put forward evidence or provided submissions as to how the respondent’s failure to acknowledge receipt of the OCF-3 amounted to behaviour that was excessive, imprudent, stubborn, inflexible, unyielding, or immoderate, as opposed to being done by mistake. Further, after the applicant resent the OCF-3, within just over two months the respondent acknowledged her entitlement to an IRB, requested documentation in order to calculate it, obtained an accounting report, and subsequently paid the benefit. While the respondent did not technically comply with s. 36(4), I am not satisfied that this was due to the type of behaviour that would attract an award.

30As such, I find that the applicant has not met her burden, on a balance of probabilities, that she is entitled to an award.

ORDER

31The quantum of IRBs payable for the first 104 weeks of disability is $38.00 per week.

32The applicant is entitled to interest pursuant to s. 51 on the IRBs paid for the period of January 30, 2023, to April 2, 2024.

33The respondent is not liable to pay an award.