In the Financial Services Commission of Ontario (FSCO) Appeal Order P16-00022, in the matter of Perth Insurance Company and Salim Surani, dated August 18, 2017, Director's Delegate David Evans provided clarification on the deduction of post-accident income from self-employment, pursuant to paragraph 7(3)(b) of the Statutory Accident Benefits Schedule–Effective September 1, 2010, Ontario Regulation 34/10, as amended (SABS).
As you will recall, Mr. and Ms. Surani, married pharmacists, were injured in a motor-vehicle accident on December 12, 2010. Ms. Surani worked as the pharmacist in charge of operations at their Scarborough pharmacy and her income-replacement benefit (IRB) was based on the operating results of the Scarborough Pharmacy. After the accident, Mr. Surani hired pharmacists to replace Ms. Surani, although Ms. Surani made herself available by telephone to answer questions about the operation of the pharmacy and she made attempts to return to work as a pharmacist trying to do “little things” by helping others with phone calls to doctors and nurses, and making sure the ordering was done properly. Ms. Surani was not paid for these attempts to return to work.
In reaching her decision, Arbitrator Sone concluded that the tasks that Ms. Surani performed at the pharmacy after the accident were insufficient for her to be actively engaged in the business. As a result, the post-accident income of Scarborough Pharmacy was not considered to be her “earned income,” hence not deductible in the calculation of her IRB, pursuant to paragraph 7(3)(b) of the SABS.
However, Director's Delegate Evans determined that “post-accident income is broader than just the person's active participation in the business.” If the Scarborough Pharmacy earned income as a result of pharmacists being hired to replace Ms. Surani and if the resulting income earned by the Scarborough Pharmacy can only be deducted as post-accident income if Ms. Surani herself actively participated in the business, then paragraph 7(3)(b) of the SABS “would be rendered redundant.” It is already agreed that [Ms. Surani] could not engage in the essential tasks of her self-employment, which is why she qualified for [an IRB] in the first place,” Director's Delegate Evans concluded.
Application was then made for judicial review. However, on December 7, 2018, J. Swinton of the Divisional Court (File No.: 541/17) decided, “in my view, the decision of the Director's Delegate was reasonable, and I would dismiss the application for judicial review.” J. Swinton observed, “[a]s the Director's Delegate correctly pointed out, a requirement of active participation is not found in the words of s.7(3)(b)…the purpose of the IRBs is to provide compensation for income loss—but subject to statutory limits. The SABs [sic] reflect the fact that the self-employed person who has been injured may not have lost anything financially, so as to be entitled to the $400 weekly benefit sought here, if he or she has a business that continues to operate after the accident and to generate income.”
As with pre-accident income, post-accident income of a self-employed person is the post-accident profit of the person's business and that income is deductible in the calculation of an IRB.