Applicant makes case for correct IRB calculation - Aviva v WDW, 2018 CanLII 81989 (ON LAT 17-005894)

February 01, 2019, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Aviva v WDW, 2018 CanLII 81989 (ON LAT 17-005894)

Date of Decision: May 4, 2018
Heard Before: Adjudicator Christopher A. Ferguson

INCOME REPLACEMENT BENEFITS and REPAYMENT: what is considered income; insurer uses an invalid calculation of income; applicant is entitled to full amount of IRB on an ongoing basis

WDW was involved in an automobile accident on October 11, 2013 as a passenger in a rental vehicle insured by Aviva. WDW applied for and received various benefits from Aviva pursuant to the Schedule.    Aviva paid IRBs to WDW in September 2016 for the period between October 2013 and September 2014. It then determined that WDW was not entitled to the amount it had paid him for IRBs for that period. It asserts that WDW was paid as the result of an error in calculating the quantum (i.e. amount) of his IRB entitlement.

Aviva issued a notice to WDW dated July 5, 2017 informing him of the overpayment and requesting repayment. WDW responded by letter in January 2018 disputing Aviva’s recalculation of his IRB. Aviva has applied to the Tribunal to determine its entitlement – and WDW’s obligation to repay the disputed amount.


  1. Is the Aviva entitled to a repayment from WDW of $6,059.23 for IRBs, which Aviva states was paid as a result of an error?
  2. Is WDW entitled to IRBs for a period of time and in a quantum to be determined by the time of the hearing?
  3. Is Aviva liable to pay WDW’s costs in this proceeding?


  1. There was not an overpayment of IRBs and that WDW is not liable to repay Aviva $6,059.23 that it paid in benefits to him.
  2. WDW is entitled to IRBs in the amount of $400.00 weekly from October 18, 2013 to date.

Section 52 of the Schedule prescribes that a claimant is liable to repay any benefit paid to him or her as the result of an error.  Section 52(3) requires the insurer to notify the claimant, within twelve months of the overpayment, that it requires him or her to repay benefits.

WDW’s entitlement to IRBs

The error and overpayment claimed by Aviva do not relate to the applicant’s medical eligibility for IRBs.  The case before the Adjudicator is strictly financial.

The Adjudicator reviewed the facts.

WDW had eligible pre-accident income including earnings from:

  1. personal income
  2. self-employment income from his numbered company (“ONCorp 9”)
  3. income from his farm company (“SOFarms”)

The parties' evidence and argument is entirely centred on questions of how to interpret the Schedule. No case law or jurisprudence was submitted in argument to assist me in deciding how to interpret and apply the relevant sections.

Section 4 of the Schedule sets out how to determine an insured person’s pre-accident gross employment income for the purpose of calculating IRBs.  It sets out options, from which the insured can choose, for determining pre-accident gross annual income.  IRBs cover self-employment income.

  • Section 4(2)3 of the Schedule prescribes that a person who was self-employed for at least a year before the accident may designate the amount of his/her gross employment income during the last fiscal year (“FY”) of the business that ended on or before the accident as his “gross annual employment income”.
  •  Section 7 of the Schedule prescribes how to calculate the amount of weekly IRB. In effect, an eligible person is paid 70% of his/her pre-employment income, minus 70% of any gross employment income earned after the accident.

How should the amount of WDW’s IRBs be calculated?

The parties do not dispute the amounts earned by WDW during the year prior to the accident or during his attempts to return to work after the accident. Because the dollar amounts submitted by both sides as WDW's pre- and post-accident earnings and losses are uncontested.

Aviva submits that the initial IRB calculation was performed by its consultant, Matson Driscoll & Damico Ltd., Forensic Accountants (“MDD”), in a report dated September 15, 2016. That report put WDW’s eligible post-accident base weekly income at $101.47 – 70% of weekly income of $144.95 earned by WDW from October 11, 2013 to September 30, 2014. Based on that report, it proceeded to pay WDW $6,059.23 in IRBs for the period of October 11, 2013 to September 30, 2014. Aviva made the payment in September 2016.

Aviva submits that it misinterpreted or misapplied MDD’s report and used $101.47 as the quantum for weekly IRBs payable to WDW. In fact, because it was post- and not pre-accident income, Aviva argues that $101.47 was in fact the amount that it was entitled to deduct from any IRBs owing to WDW.       Aviva wrote to WDW on July 5, 2017 informing him of its error and requesting repayment. WDW then obtained a report from his consultant  dated January 9, 2018. This report states WDW’s IRB entitlement is $400.00 per week.

To support its case for repayment, Aviva, with support from MDD, including a second report dated February 2, 2018 argues that the RSM report is flawed because:

  1. It calculates WDW’s 2012 farming income as “gross employment income”.
  2. It is in fact “self-employment income” as defined by the Schedule s.4(1)
  3. It failed to note losses from ONCorp 9 for the last FY pre-dating the accident
  4. As a result of the above errors, RSM’s assumption of gross employment earnings of $12,747.02 for the last FY prior to the accident is incorrect.
  5. It failed to set out the information reviewed and relied on it to form its conclusion.

Aviva argues that the amount of IRB payable to WDW from October 11, 2013 to September 30, 2014 is actually $0.00 based on its calculation, and therefore, the amount of IRBs payable is zero.

In response to Aviva’s submissions, WDW argues as follows:

  1. The Schedule s.4(2)3 allows a self-employed person such as WDW to designate the amount of his gross employment income during the last FY of the business that ended on or before the accident as his “gross annual employment income”.
  2. WDW’s last pre-accident FY was 2012. Therefore, IRBs should be calculated using the self-employment income of $52,995 earned during 2012, reported in his 2012 income tax return and filed prior to the accident.
  3. Corporate losses are immaterial in cases where personal income is reported and taxed.  They are not to be deducted.

On the basis of the evidence the Adjudicator found that WDW is entitled to the IRB amounts he claims for the following reasons:

Aviva provided no authority for its contention that it can deduct ONCorp 9’s losses – which are corporate losses -- from WDW’s personal income. No such authority is expressly provided in the Schedule.

  1. The Adjudicator agreed with WDW’s plain reading of s.4(2)3 of the Schedule: WDW as a self-employed person may designate his gross employment income from 2012 (the last FY of the business that ended before the accident) as his “gross annual employment income”. That amount – uncontested – is $52,995.
  2. There is no basis for Aviva’s assertion that WDW cannot use s.4(2)3 of the Schedule because his income from self-employment is somehow excluded from the definition of “gross employment income” in s.4(1) of the Schedule, for the purposes of applying s.4(2)1. Aviva provides none.
  3. The appropriate formula for determining WDW’s IRB entitlement is:


weekly base income = $37,096.50  [i.e. 70% of net farming income] ÷ 52 weeks= $713.39/week

WDW had weekly earned income of $101.47 during the period in dispute: $713.39 - $101.47 = $611.92/week

$400.00 is the prescribed maximum weekly IRB payable under s.7(1) and 7(2)i of the Schedule for a person during the first 104 weeks of disability. The amount payable to WDW is $400.00/week, given that the amount I calculated exceeds the prescribed maximum. As the result of the foregoing findings, I find that Aviva is not entitled to repayment of any of the IRBs it paid out to WDW.

At paragraph 20 of his Response submission, WDW claims that he is entitled to IRBs “in the weekly quantum of $400.00 from October 11, 2013 to date”. He expressly bases his claim on the detailed calculation by RSM. Aviva did not file a Reply submission in this matter, which I find means that the period of entitlement claimed by WDW is uncontested.

The parties did not indicate that WDW's eligibility for entitlement to IRBs has changed on any basis – medical or financial -- since the October 2013 to September 2014 period. In both submissions, “entitlement” is argued on strictly financial grounds, the question being how to calculate the amount of the IRBs to which WDW is entitled.

On the basis of the evidence WDW is entitled to IRBs in the amount of $400.00 for the period of October 18, 2013 to date.

Posted under Accident Benefit News, Automobile Accident Benefits, Car Accidents, Income Replacement Benefits, LAT Case, LAT Decisions

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