Volume. 9 Issue. 16 – May 14, 2025
First Year of Self Employment Results in $Nil IRB Despite Demonstrated Earnings
This week the Tribunal considers a matter wherein the Applicant, injured in an October 2023 MVA, earned over $43,000 commencing January 2023, from her newly formed self employed business. In 2022, the Applicant earned over $99,000 in employment earnings. Ultimately at issue was the appropriate method of calculating IRB entitlement. As it stands, it would appear that a strictly self-employed Applicant who starts a business venture in the same year as the MVA, has no means under the Schedule to quantify IRB. Have we perhaps a “blind spot” here, as it does seem odd that someone earns over $43,000 in the year of the MVA, yet is found entitled to an IRB of nil, given the consumer protection nature of the Schedule?
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Legislative “Blind Spot”? – Injured in an October 2023 MVA, the Applicant Omoruyi sought ongoing entitlement to IRB at the rate of $400 per week. Throughout 2022, Omoruyi was employed as a PSW. She however transitioned to another employment agency commencing January 2023. At this agency, she was required to register a business. The agency itself would not pay benefits, would not withhold income taxes, and would not handle CPP and EI remittances. The applicant registered an Ontario business on December 16, 2022, and started the proposed arrangement with the agency on January 1, 2023. An Employer’s Confirmation Form/OCF-2, dated November 2, 2023 indicated that the last date worked by Omoruyi was September 23, 2023. At issue in 24-005585 v TD Insurance, was entitlement to IRB, as well as the appropriate quantum of same.
Substantial Inability
The Tribunal was satisfied based on the evidence that Omoruyi was unable to perform the essential tasks of her employment as a result of the accident in the period immediately following the accident. It was found that TD failed to direct the Tribunal to any medical evidence that indicated that Omoruyi had the ability to perform the essential tasks of her pre-accident work in the period immediately following the accident. However, the Tribunal found that the multidisciplinary IEs secured by TD were persuasive in that they opine Omoruyi had recovered from her injuries and no longer met the test of entitlement to IRBs. The Tribunal noted that Omoruyi did not direct it to any medical evidence to indicate that she still had a substantial inability to perform the essential tasks of her employment as a result of the accident. Accordingly, based on the uncontroverted reports of the IE assessors, the end date for medical entitlement to IRBs is the date of the physiatry assessment, being May 2, 2024.
Employed or Self Employed
Omoruyi argued that she was “employed” at the time of the accident and is therefore entitled to an IRB quantum of $400.00 per week, per s. 4(2)1. TD on the other hand argued that Omoruyi was “self-employed” at the time of the accident, and, under s. 4(3), is entitled to an IRB quantum of nil since her business reported no income in 2022. Omoruyi made several representations regarding her work status in support of her contention that she was in fact “employed” in 2023, as was the case with her prior agency in 2022. The Tribunal however found that “the management of the applicant’s schedule and daily activities, whether she worked for more than one client, whether she collected HST, what bank account she used, and whether she claimed business expenses, are not meaningful in determining whether the applicant meets the definition of “self-employed”.
The Tribunal further noted that “in interpreting the definition of “self-employed”, I find the characterization of the applicant’s status for tax purposes, by Sugicare and the CRA, more persuasive than the applicant’s view of her employment status. I find that an injured person’s subjective opinion of their employment status does not provide me with the guidance required to base clear and unambiguous decisions.” While Omoruyi “submits that she did not engage in certain activities normally associated with running a business, such as claiming business expenses, I cannot accept that these factors changed her status to “employed…I find that the applicant carried on the essential tasks of her occupation as a self-employed person. I find that her occupation meets the Schedule’s definition of “self-employment.” As a result, my interpretation of the definitions in the Schedule is that the applicant was self-employed at the time of the accident”
Can the applicant rely on her employment income in the fiscal year before the accident, or self-employment income in the year of the accident, to calculate the quantum of IRBs?
In 2022, the year preceding the MVA, Omoruyi earned employment income of $99,201, with the self-employment income in 2022 being nil. Omoruyi’s self-employment income in 2023 was $43,791. The Tribunal found that as Omoruyi was solely “self-employed” at the time of the accident, there was no basis upon which she could use her previous year’s employment income as a basis for IRB calculation, as s. 4(2)3 only applies if one were both employed and self employed. The Tribunal did not accept the assertion that “the word “may” in s. 4(2)3 should be interpreted liberally and that she may designate her 2022 employment income as the basis for her IRB calculation, even if she were found be “self-employed” at the time of the accident.”
Reference was made to the Tribunal in K.D. v Aviva Insurance Company (2020 CanLII 27383 ON LAT) (“K.D.”)., in which an applicant was solely self-employed on the date of the accident, with no self-employment income for the previous fiscal year. In that matter, the applicant was entitled to an IRB of nil. Omoruyi argued that in K.D., the adjudicator recognized that there are circumstances where a strict interpretation of s. 4(3) could create an unjust result, an unintentional blind spot and unfairness to the applicant. However, the Tribunal found “that the applicant’s arguments regarding K.D. do not direct me to an example of where the Tribunal decided to avoid an unjust result and correct an unintentional blind spot in the Schedule. To the contrary, I find that the decision in K.D., while I am not bound by it strictly, supports a literal, narrow interpretation of the Schedule, and does not support an expansive interpretation.”
The Tribunal further found that “s. 4(3) does not allow me to consider self-employment income in the year of the accident as a basis for calculating the quantum of IRBs. The language in s. 4(3) is meant to provide a clear and unambiguous basis for calculating a self-employed person’s pre-accident income, namely the business’s previous fiscal year. The applicant has not directed me to any section of the Schedule that allows her to designate her self-employment income in 2023 as the basis to calculate her quantum of IRBs.”
Concluding, “because the applicant was solely self-employed at the time of the accident, she may only use her prior year’s self-employment income for the prior fiscal year as the basis for her IRB calculation. Because her business did not report any income in the prior fiscal year, the quantum of IRBs is nil.”
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