Aviva Insurance Company of Canada v. Spence, 2022 ONSC 4988 (CanLII)
A three judge panel of the Divisional Court heard the appeal of the Licence Appeal Tribunal’s 2021 decision in Aviva Insurance Company of Canada v Spence regarding the deductibility of EI benefits from income replacement benefits (“IRBs”).
On March 4, 2019, Ms. Spence was involved in a motor vehicle accident. At the time of the accident, she was employed full-time as a registered nurse. Due to the injuries that she sustained from the accident, she applied for accident benefits from her insurer, Aviva, under the Statutory Accident Benefits Schedule (SABS). Based on her gross annual income, she was entitled to receive an IRB of $400 per week for the period from June 23, 2019 to October 26, 2019. During the period of entitlement, Ms. Spence also received unemployment insurance sickness benefits in the amount of $562 per week under the EIA.
On February 16, 2021 the Licence Appeal Tribunal decided that sickness benefits paid under the Employment Insurance Act were not deductible from Ms. Spence’s Income Replacement Benefits under the Statutory Accident Benefits Schedule. The adjudicator ordered that she was entitled to IRBs in the amount of $5,901, plus interest, representing the amount that had been deducted because of the EI sickness benefits Ms. Spence had received.
On appeal, the Divisional Court in Aviva Insurance Company of Canada v Spence disagreed and concluded that the EI sickness benefits received after the accident should have been deducted from Ms. Spence’s IRBs. Writing for a unanimous panel which included Justices J.A. Ramsay and K. Swinton, Regional Senior Chief Justice Ellies specified that the LAT adjudicator made three errors, finding an ambiguity in the legislation where none existed, finding that only income from active employment qualifies as gross employment income, and finding that the EI sickness benefits paid to Ms. Spence qualified as temporary disability benefits. The Court found that the decision below, which was upheld by the same adjudicator on reconsideration, created disharmony where none existed before.
The Divisional Court made several key findings. Firstly, all forms of employment insurance should be treated the same way under the SABS (treated as gross employment income). Secondly, the definition of gross employment income does not require that an insured be actively employed after the accident. Thirdly, EI sickness benefits are not temporary disability benefits. Only temporary disability benefits received “in respect of an impairment that occurred before the accident” are deductible from the amount otherwise payable to an insured person as an IRB. Finally, the Court found that sickness and health benefits received post-accident can be deducted from IRB.
This decision provides clarity to insurers and claimants regarding the deductibility of EI benefits from income replacement benefits.