Volume. 4 Issue. 35 – September 9, 2020

Unreasonable, Frivolous and Even Bad Faith Behaviour

The Cost(s) of Bad Faith – In 18-009967 v Allstate, a matter with a long procedural history, the Applicant brought a motion making seven specific orders for productions, as well as an order for Costs. After ruling on the various requests, the Tribunal considered the request for costs, citing numerous transgressions on the Respondent’s part. Firstly, they were in breach of an Order to which it consented (to produce the IME file) and “an applicant should not have to bring a motion to compel the respondent to abide to a Tribunal order especially an order that was consented to.” Further, “the respondent has not been forthcoming in its information and caused confusion by again ignoring the letters from the applicant when he was seeking clarification regarding the existence of an IME File.”

The fact of having ignored letters seeking clarification “constitutes unreasonably (sic) behavior and bad faith and caused the motion.” The Respondent was found to have “acted in an unreasonable manner that it frustrated the Tribunal’s capacity to maintain an efficient proceeding and in a manner that was disrespectful to the applicant and in bad faith by ignoring the requests from the applicant and its obligations under section 50 of the Schedule.” Collectively, the actions of the Respondent “do rise to the threshold of unreasonable and frivolous and even bad faith by not abiding to the Order of the Tribunal and by ignoring letters from the applicant.” As a result, the Tribunal ordered costs payable in the amount of $500.

Consumer Protection Excuses Late CRA Filing

Very Late CRA Filings Accepted After In-Person Hearing – In 18-007077 v Aviva, the Applicant sought ongoing IRB based upon his reported 2016 earnings, with his CRA NOA confirming earnings of $3,000. It was then not until after the conclusion of the in-person portion of the hearing that the Applicant provided an updated 2016 NOA, with income now reported as $37,400. The Applicant “conceded” that there were “errors” in his original filings, “but his updated filings provide an accurate representation of his pre-accident earnings.”

The Respondent argued that this was not an “error”, as the 2016 T4 indicated $9,000, with the NOA lower still at $3,000, and that it was “highly unlikely” that the Applicant, would somehow have missed these “dramatic differences”, calling the Applicant’s credibility into question. Further, the Respondent argued that the Schedule denotes that income is to be calculated “without reference to any income the person has failed to report contrary to that Act or legislation. Since the applicant did not report his full income to the CRA at first instance, he must be held to the lower amount in his original Notice of Assessment.” The Tribunal however indicated that credibility was “not a feature of this analysis… the focus is on the amount accepted by the CRA.”

Further, the interpretation from the Respondent “ignores the consumer protection mandate that underpins the entire Schedule.” This mandate “is best protected through an interpretation of these provisions that is not concerned about what caused the CRA to issue a reassessment. Rather, so long as the CRA has ‘determined’ that a reassessment must take place, this updated amount should be relied upon by the Tribunal.” Therefore, the Applicant was entitled to the maximum IRB of $400 per week.

“Gift” Returned as Income Confirmed

Income Not a “Gift” – In 17-006525 v Aviva, the case of a “gift” v. “income”, a rehearing was ordered before the same adjudicator. The Tribunal, following a review of the transcripts from the original hearing, the evidence and the law found that the Applicant was in fact receiving post-accident employment income that is deductible Further, “there is no cogent and compelling evidence in support of the applicant’s claim that the money was a gift.” With the Respondent therefore entitled to deduct the confirmed post-accident earnings, there was no IRB payable as a result.

The Applicant’s position was that she was not actively employed and was therefore not earning employment income from her mother’s business. The Respondent noted specifically that “the Income Tax Act does not treat income differently depending on how active a person is. The Tribunal found that “section s 4, 7(2), 7(3)(b) of the Schedule do not distinguish between active and passive income in the calculation of the insured’s income…any net income (active/passive) earned post-accident should be deducted, to avoid…a gross overpayment…” Therefore, “the applicant does not have to be actively engaged in or ‘doing work in exchange for money’, in order to be considered to be receiving income as a result of employment.”

Considering whether the payments could constitute a “gift”, the Tribunal found no corroborating evidence of such, specifically finding missing “the intention to make a gift on the part of the donor, without consideration or expectation of remuneration”. There had been no discussions with her accountant about paying the daughter money as a gift rather than income through the business. The evidence showed “the applicant to have received the money in the same form post-accident as she did pre-accident. There was no difference; it was reported to the CRA as income from employment for tax purposes and the documentation in support of her request for an IRB also showed it to be income from employment.”

Related LAT inFORMER issues:

“There could not have been any more flagrant non-compliance than this” – IE Report ExcludedCosts Awards – Sufficient Deterrence?
Remaining on Payroll Does not Equate to Employment Income

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