Insured Fails to Provide Evidence of Income

February 15, 2017, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

Thomas and Dominion – IRBs; no interest due on unpaid benefits; no special award; lack of required documents provided by insured; burden of proof not met for establishing income; claim for IRBs denied

Thomas and Dominion

Decision Date: 2016-09-19
Heard Before: Adjudicator Marcel Mongeon

Mr. Thomas was hurt in a car accident on May 28, 2013 while returning from work as a senior database administrator. He missed a few days of work but no pay was lost. On August 2, 2013, Mr. Thomas’s contract with Agricorp came to an end. The reason given for the termination of Mr. Thomas’s employment was that there were “fiscal restraints on the organization.”  Mr. Thomas applied for and received Employment Insurance starting August 17, 2013 for 40 weeks. He has recently graduated from a paralegal training program he attended for one year starting July 2015, and is currently awaiting his licensing exams to be qualified. As a result of the accident Mr. Thomas sought accident benefits from Dominion, however when the parties were unable to resolve their disputes through mediation Mr. Thomas applied for arbitration at the FSCO.

The issues in this Hearing are:

1. Is Mr. Thomas entitled to an Income Replacement Benefit?
2. Is Mr. Thomas entitled to interest on any unpaid benefits?
3. Is Mr. Thomas entitled to a Special Award?
4. Is either party entitled to their expenses in respect of the Hearing?

Result:

1. Mr. Thomas is not entitled to an Income Replacement Benefit or any interest thereon.
2. Mr. Thomas is not entitled to a Special Award.
3. Dominion is entitled to its expenses of the Hearing which I fix at $3,750.00 plus HST.

On June 4, 2013, Mr. Thomas applied to Dominion for Income Replacement Benefits. On that application, Mr. Thomas in Part 8 gave information about his employment. In addition to his employment with Agricorp, he listed employment from May 2013 to present with Samoht Partners Inc. as an IT consultant for 20 to 40 hours per week at $99.00 per hour. The corporation was incorporated with this name on January 24, 2007, its registered office address is listed as “Care of” Mr. Thomas and the two directors of the corporation are Mr. Thomas and Mr. Thomas’s representative and spouse, Ms. Idowdu Florence Adedoyin-Thomas.

After the filing of the OCF-1, Dominion asked Mr. Thomas for specific information “to help us assess your entitlements to a Med/Rehab Benefit, Income Replacement Benefit and any other applicable benefits that may arise.” The information requested included: “OCF-2 Employer’s Confirmation form (both employers).” Follow-up correspondence from Dominion took place on June 20, 2013. On July 8, 2013, Dominion sent Mr. Thomas a letter suspending benefits until the information requested was provided to Dominion. On January 28, 2016 Dominion sent Mr. Thomas a letter confirming that although the Income Replacement Benefit was “ongoing until further notice”, it was also “suspended until requested information is received.” On January 28, 2016, Dominion wrote to Mr. Thomas and indicated that on the basis of the medical evidence it had received, it had determined that “effective February 23, 2016, [Mr. Thomas’s] entitlement to the Income Replacement Benefit is $0.00.”

In order to assist in determining Mr. Thomas’s entitlement to an Income Replacement Benefit (IRBs), Dominion engaged the services of its expert witness, Ms. L on May 5, 2014, providing her with some income tax information which had been received from the 2012, 2013 and 2014 tax years. Ms. L analyzed the information and determined that Mr. Thomas was likely self-employed using the company Samoht as a form of partnership vehicle. Ms. L testified that the information contained in Mr. Thomas’s 2012 Tax return showed the allocation of a $50,000.00 loss from “Net partnership income.” She further noted that from the accompanying “Statement of Business or Professional Activities”, Mr. Thomas listed that he owned 50% of the partnership which operated under the business name Samoht Partners Inc. The business of Samoht on that form was listed as IT Consulting Services and Hedge Fund Management. Ms. L also noted that on Mr. Thomas’s 2013 tax return, line 122 (Net partnership income) was listed as a loss of $43,505.00.  Ms. L testified that having full financial information for Samoht was important in order to properly determine the quantum of Mr. Thomas’s self-employment income. Without seeing these statements, it would not be possible to determine if there was income that had been reallocated to another partner within this partnership. Ms. L made it clear that these financial statements would allow her to determine the true self-employment income for Mr. Thomas.

Mr. Thomas’s representative’s responses to requests for information about Samoht since 2014 have been the following:

• May 1, 2014: “My client wasn’t self-employed prior to the accident of May 28, 2013 but was one of the shareholders of a Canadian controlled private corporation (CCPC) under Canada Income Tax Act.”
• July 1, 2014: “My client wasn’t self-employed prior to the accident of May 28, 2013, he was a staff of Agricorp, so it was our opinion that copies of the financial statements and the T2 Corporation for Samoht Partners Inc. are not applicable to motor vehicle accident of May 28th 2013.”
• November 27, 2014: “Please note that Samoht Partners Inc. is a federally incorporated business, while Mr. Vincent Thomas is a shareholder of the company, he was not on the date of the accident self-employed through Samoht Partners Inc. Mr. Vincent Thomas was an employee of Agricorp before and on the date of the Motor Vehicle Accident, therefore he has no authority to provide any other documentation beside Tax Return and the Notice of Assessment already forwarded to your office.”

On May 16, 2016, Dominion made an application to the Pre-Hearing Arbitrator relating to productions. By letter, dated May 19, 2016, Arbitrator Creo ordered Mr. Thomas to provide the corporate income tax returns from Samoht Partners Inc. for the fiscal years 2012 to 2016, including shareholder information. The required production was not made. Rather, by letter, dated June 6, 2016, Mr. Thomas’s representative replied including:

• “Mr. Vincent Thomas, at the time of the accident was employed by Agricorp and not by Samoht Partners Inc.  … Samoht Partners Inc. is a separate legal entity from my client. My Client has ceased to be a shareholder of Samoht Partners Inc. as at January 11, 2013 and does not have the capacity to provide information related to the corporation.”
• “My Client was not a sole shareholder of Samoht Partners Inc., he was not an employee of Samoht at the time of the accident, and therefore he is not under any obligation to provide corporate tax returns (T2) from Samoht Partners Inc. for the years 2012 to 2016.”
• “My Client hereby reiterate that he is not in a position to provide the Corporate tax returns (T2) from Samoht Partners Inc. for the years 2012 to 2016 because he was not a sole shareholder of the company, he was not an employee of Samoht Partners Inc. at the time of accident and he was employed by Agricorp at the time of the accident. He is not in possession or in control of corporate tax returns (T2) from Samoht Partners Inc.

No evidence of a transfer of Mr. Thomas’s shares in Samoht was offered. No evidence has been presented that either Mr. Thomas or his representative have resigned as directors of Samoht. No evidence that appropriate forms under the CBCA have ever been filed to change the names of directors or to change the registered office of Samoht was offered.

At the outset of this Hearing, Dominion asked the Arbitrator to consider staying the Hearing on the basis of the non-production of the Samoht records. The Arbitrator denied a stay of the Hearing but drew an adverse inference whenever evidence touched on Mr. Thomas’s income or losses related to this company, and the Arbitrator indicated he would weigh the credibility of the evidence given by Mr. Thomas relating to any matters for which there was no supporting documentation. The Arbitrator found as a fact that Mr. Thomas to be a director of Samoht.

The Arbitrator did not find it credible that Mr. Thomas – who has training as a paralegal – or his wife – who is a practising lawyer – would not know that appropriate forms must be filed with Corporations Canada when directors of a corporation change or the registered office of a corporation changes. In this case, the information published continues to show them both as directors of Samoht and the registered office to be their residence address. The Arbitrator had difficulty accepting the credibility of any assertions advanced by either Mr. Thomas or his representative that they are unable to obtain documents of Samoht. Additional concerns about credibility arise from documents exchanged during the course of the application.

The Arbitrator reviewed the correspondence submitted and determined that due to many inconsistencies the credibility of Mr. Thomas and his representative must be questioned. The Arbitrator noted that the burden of proof was on Mr. Thomas to establish his entitlement to the benefit he seeks.

The Arbitrator drew an adverse inference where documents have not been provided to support a proposition advanced by Mr. Thomas relating to Samoht. As there are no documents, the burden of proof has not been met. The claim for Income Replacement Benefits has not been proven. Without an award of any benefit, there cannot be a Special Award. The Arbitrator found that Dominion was justified in its requests for documentation.

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