



COURT OF APPEAL FOR ONTARIO

CITATION: Nemchin v. Green, 2021 ONCA 573

DATE: 20210819

DOCKET: C67869

Roberts, Trotter and Thorburn
    JJ.A.

BETWEEN

Tatiana Nemchin

Plaintiff (Appellant)

and

Yvonne Green

Defendant
    (Respondent)

Joseph Y. Obagi and Elizabeth A. Quigley,
    for the appellant

Stephen G. Ross, Thomas Macmillan and
    Meryl Rodrigues, for the respondent

Heard: October 27, 2020 by
    video conference

Supplementary
    reasons to the judgment in
Nemchin v. Green
, 2021 ONCA 238, released on
    April 16, 2021.

ADDENDUM

[1]

In our reasons dated April 16, 2021, reported at
    2021 ONCA 238, we allowed the appellants appeal from the order requiring her
    to top up the amount of the long-term disability benefits received from her
    employers group benefits insurer, Sun Life Assurance Company of Canada (Sun Life),
    that she assigned to the respondents insurer, Aviva Insurance Company of
    Canada (Aviva), pursuant to s. 267.8(12) of the
Insurance Act
, R.S.O.
    1990, c. I.8. Costs were determined in our May 19, 2021 endorsement, reported at
    2021 ONCA 342.

[2]

In paragraph 46 of our reasons, we invited the
    parties to make brief written submissions if they required further direction
    concerning the treatment of any tax refund they may obtain with respect to the
    tax remittances that Sun Life has made from the disability payments since the
    date of the assignment to Aviva and the wording of the amended formal order of
    the trial judge in accordance with this courts reasons. We have received and
    reviewed the parties further written submissions on these matters.

[3]

The appellant raises the following issues. First,
    she submits that in the event Aviva chooses not to request that Sun Life cease
    to deduct taxes from the plan payments, she will be prejudiced because she will
    continue to receive a T4A document from Sun Life and will have to pay taxes on
    monies she is not receiving and that should not be taxable. In this event, the
    appellant submits she should be entitled to independently contest Sun Lifes
    tax deduction. Second, in the event that Aviva chooses not to apply for a tax
    refund of the Sun Life tax remittances made during the assignment, she is
    entitled to apply for any tax refund and Aviva must pay her expenses to do so and
    pay for any other expenses related to the assignments operation. Finally, if
    she is successful in her independent applications to Sun Life or the Canada
    Revenue Agency (CRA), she submits that Aviva cannot then reassert a claim to
    any tax differential because it has abandoned its interest.

[4]

The respondent submits that this courts order
    does not compel Aviva to contest Sun Lifes tax remittances or seek a tax
    refund with respect to those remittances from the CRA. The respondent does not object
    to the appellant contesting Sun Lifes tax deductions at source or her seeking a
    tax refund from the CRA but she must do so at her own expense. Moreover, in the
    event she receives a tax refund of any Sun Life remittances, she must pay any such
    tax refund to Aviva in accordance with the assignment of her rights under the plan
    to avoid double recovery.

[5]

While it is certainly consistent with the
    respondents position on appeal that Aviva should request that Sun Life cease
    deducting taxes at source and seek a refund of tax remittances from the CRA, we
    agree that our order does not compel it to do so. Neither party raised and accordingly
    we did not determine the question of whether, if Aviva does not make these
    applications, the appellant should be permitted to do so and at Avivas expense.

[6]

In paragraph 29 of our reasons, we clarified that
by virtue and for the term of the assignment, [Aviva]
    has all the appellants rights and is subject to all the provisions under the
    plan, including, subject to the [Sun Life] plan, the ability to deal directly
    with Sun Life and to contest the deduction of income taxes from the payments
(footnote omitted). In other words, as we also stated at paragraphs 39-42 and 44,
    Aviva steps into the appellants shoes during the assignment and is entitled to
    receive the benefits, but for the assignment, the appellant would have received
    under the plan and make any claim to Sun Life that the appellant would have
    been entitled to make in relation to her rights under the plan, with the
    appellants cooperation, if required by Sun Life, and at Avivas expense. By
    the same token, as a result and for the duration of the assignment, the
    appellant is relieved from any further cost in relation to the assignment of her
    rights under the plan. Accordingly, if Aviva wishes to contest Sun Lifes
    remittances or pursue any tax refund for the period of the assignment, it must pay
    the expenses for doing so.

[7]

The practical difficulty with the appellants
    request that she be permitted to deal directly with Sun Life concerning the
    source deduction issue is that we have not been advised nor do we have any
    evidence whether, given the assignment of the appellants rights, Sun Life is
    content to deal directly with the appellant concerning the source deduction
    issue or whether that request must come from Aviva, as assignee. As a result,
    we are not in a position to make an order that may affect a non-party, Sun Life.
    However, this is something that the parties should be able to work out on
    consent with Sun Life. In the event that Sun Life will deal directly with the
    appellant, Aviva has indicated that it has no objection to her doing so. However,
    as we noted at paragraph 35 of our April 16 reasons, Sun Life previously took
    the position that absent a CRA ruling or court order, it would continue to make
    source deductions.

[8]

With respect to the reimbursement of the appellants
    expenses, there is no evidence that the appellant has incurred or will incur
    any additional expense to respond to the T4A slip received from Sun Life. If
    Sun Life has been deducting and remitting the correct amount of taxes, it is
    difficult to see why the appellant would have additional taxes to pay; and if
    the appellant is submitting an annual tax return in any event, it is unlikely
    that including the T4A slip would add to the cost of the returns preparation. That
    said, to the extent that the appellant is actually incurring additional expense
    to respond to the T4A slip, she is entitled to be reimbursed by Aviva as part
    of the expenses related to the assignment that we have already determined are
    Avivas responsibility. Again, this is an issue that the parties should be able
    to resolve upon the appellant providing to Aviva evidence of her expenses.

[9]

With respect to the issue of the tax refund, given
    that Aviva, as assignee of the appellants rights, would be entitled to the
    gross payments under the plan if Sun Life made no source deductions, it follows
    that it is entitled to receive any tax refund of those source deductions, just
    as the appellant would but for the assignment. Aviva has not agreed to forego its
    entitlement to any tax refund and there is no basis to order that it should.

[10]

That said, as confirmed by the respondent, if
    Aviva does not pursue a tax refund, there is no impediment to the appellant
    seeking from the CRA a refund of the Sun Life remittances. Indeed, any such
    application to the CRA would likely have to be in the name of the appellant,
    the taxpayer. The question is whether Aviva should fund the appellants costs of
    such an application as part of the costs of the assignment. We conclude that it
    should because Aviva would receive the greater benefit of the tax refunds as
    part of the assignment.

[11]

Accordingly, if Aviva does not pursue the
    application for a tax refund, then it shall reimburse the appellants
    reasonable expenses for bringing such an application.

L.B.
    Roberts J.A.

Gary
    Trotter J.A.

J.A. Thorburn
    J.A.


