Neutral Citation: 1992 ONICDRG 18

File No. P-000235

BETWEEN:

STEPHEN SALMON

Applicant (Appellant)

and

TORONTO TRANSIT COMMISSION (MARKEL INSURANCE)

Insurer (Respondent)

Before:

M. Patricia Richardson Director’s Delegate

Counsel:

G. James Fyshe (for Appellant, Applicant)

Brian M. Leck (for Respondent, Insurer)

Lee Samis (for Intervenor, Insurance Bureau of Canada)

Mark Sones (for Intervenor, Zurich Insurance)

By Notice of Appeal filed January 20, 1992, the insured person, Stephen Salmon (Appellant), appeals from the Order of Frederica Rotter, Arbitrator, dated December 20, 1991. The Order found that the Appellant, being an insured person entitled to receive benefits under a workers’ compensation plan, is not entitled to no-fault benefits under section 21 of Regulation 273/90 (the “No-Fault Benefits Schedule”), enacted under the Ontario Insurance Act, R.S.O. 1990, c. I.8.

The Notice of Appeal raised a number of legal issues, involving the interpretation of section 21 of the No-Fault Benefits Schedule; the jurisdiction of an arbitrator to make a determination as to the bona fides of an action brought to recover for personal injuries within the meaning of section 21 of the No-Fault Benefits Schedule; and the question whether the denial of no-fault benefits to a person entitled to workers’ compensation benefits contravenes section 15 of the Canadian Charter of Rights and Freedoms. The Appellant’s arguments based on the Charter were abandoned shortly before the date set for the hearing of oral argument on the appeal.

The Orders sought by the Appellant are as follows:

That the interpretation of section 21 of the No-Fault Benefits Schedule be referred by way of stated case to the Divisional Court under section 285 of the Insurance Act; or, in the alternative,
That the Director overturn the decision of the Arbitrator and declare the Appellant entitled to weekly income benefits under the No-Fault Benefits Schedule;
That the Arbitration Order be stayed, and the Appellant not be required to repay the overpayment of benefits pending determination of the appeal; and
An award of expenses of the appeal.

Two Applications for Intervention, in Form 8, were subsequently filed, the first by Zurich Insurance Company (“Zurich”), on March 9, 1982, and the second by the Insurance Bureau of Canada (“IBC”), on March 16, 1992.

The Applications for Intervention and the Appellant’s request that a case be stated to the Divisional Court were dealt with as preliminary issues at a prehearing conference, held on March 31, 1992. The issue relating to the Appellant’s request for a stay of the arbitral order was settled by the parties.

A. Applications for Intervention

Intervention by non-parties in appeal proceedings is authorized by section 283(8) of the Insurance Act, which provides:

283.(8) The Director may permit persons who are not parties to the appeal to make submissions on issues of law arising in an appeal.

Section 31 of the Dispute Resolution Practice Code, issued by the Ontario Insurance Commission, also deals with the subject of intervention on appeal by non-parties. The relevant sections provide:

Interventions

31.1 Subject to this Section, persons who are not parties to the appeal may make submissions on issues of law arising in an appeal.

31.2 The Director may request persons who are not parties to an appeal to make submissions on issues of law arising in an appeal, and such participation shall be on such terms as the Director may direct in his or her order permitting the person to participate.

31.3 A person who wishes to make submissions on issues of law arising in an appeal shall complete and file with the Commission an Application of Intervention.

31.4 (a) An Application of Intervention in an Appeal shall be in Form 8.

(b) Form 8 shall include the applicant’s reasons for wishing to participate and make submissions on the issues of law set out in the Application, and the applicant shall enclose such documents as he or she intends to rely upon for the application.

31.5 The applicant shall serve the Application on the parties to the appeal and shall file proof of service with the Commission.

31.6 (a) A party may support or object to an Application of Intervention by filing comments with the Commission.

(b) The comments shall include the party’s reasons why the applicant should, or should not, be permitted to participate.

(c) The party shall serve the comments on the applicant within three (3) days of receiving the Application under Section 31.5.

31.7 The Director,

(a) may determine the Application on the record,

(b) under subsection 242e(8) [now 283(8)] of the Insurance Act, may permit the applicant to make submissions on issues of law arising in an appeal, and

No comments in support of or objecting to the Applications for Intervention by Zurich and the IBC were filed by the parties. At the prehearing conference, the nature of the applicants’ interest in the legal issues raised on the appeal was addressed. Both applicants asserted that they would be directly affected by the interpretation of section 21 of the No-Fault Benefits Schedule, the IBC by virtue of its status as an organization representing a majority of Ontario automobile insurers, and Zurich as one of the Province’s largest automobile insurers. The applications for intervenor status were granted on the understanding that, the interests of the applicants being identical, the legal arguments presented should not be repetitive.

Counsel for the Appellant submitted that, in view of the importance of the legal issues raised on the appeal, and the fact that insurers had been granted intervenor status, the Appellant should have an opportunity to notify labour organizations concerning the possibility of intervention. It was agreed that, in order to encourage representation of various viewpoints, Applications for Intervention would be received by the Office of the Director and would be determined expeditiously on the basis of the record. The Appellant subsequently advised the Office of the Director that it had been determined that it would be inappropriate to communicate with labour organizations for the purpose of inviting intervention. No further Applications for Intervention were received.

B. Application To State a Case

The jurisdiction of the Director to state a case to the Divisional Court is set out in section 285 of the Insurance Act. Section 285 provides as follows:

(1) The Director may state a case in writing for the opinion of the Divisional Court upon any question that, in his or her opinion, is a question of law.

(2) The Divisional Court shall hear and determine the stated case.

The Appellant requested that I exercise my discretion under section 285 to state a case to the Divisional Court on the questions of law raised by the appeal. It was submitted that the question of the right of an insured person, who is entitled to benefits under workers’ compensation legislation, to recover substantially higher benefits under the No-Fault Benefits Schedule was a matter of importance that ought to be decided by the Divisional Court.

The Respondent (Insurer) opposed the Appellant’s application to state a case.

The legal literature and case law contain little direct authority concerning the circumstances in which a case should be stated for the opinion of a court. Much of the jurisprudence has arisen under provisions similar to section 26 of the Arbitrations Act, R.S.O. 1990, c. A.24. Section 26 authorizes an arbitrator, in proceedings to which the Act applies, to refer to the Divisional Court “any question of law arising in the course of a reference”.

In McLaren and Palmer, The Law and Practice of Commercial Arbitration (1982), at 64, it is stated that one reason for the enactment of provisions such as section 26 of the Arbitrations Act is a lack of legal expertise on the part of some arbitrators. The authors state that, in general, courts have indicated that arbitrators should state a case where the resolution of a real and substantial question of law, which can be accurately stated, is necessary to resolve the parties’ dispute.

Macaulay states, in Practice and Procedure Before Administrative Tribunals (1988), Vol. 1, section 24.2, that “[a] tribunal should not state a case unless the opinion is essential to the board’s ability to deal with the matter before it”.

The cases decided under the Arbitrations Act hold that it is inappropriate to state a case where the issue sought to be referred to the court constitutes the entire reference to arbitration, as this would amount to using the stated case as a means of revoking the submission to arbitration.

The test to be applied is whether a decision on the reference would put an end to the reference and substitute the court for the forum chosen by the parties: See Re Can. Line Materials Ltd. and Dom. Cutout Co. Ltd., 1960 CanLII 817 (ON HCJ), [1960] O.W.N. 168 (H.C.), at 169; Re Alberta and Southern Gas Co. Ltd. and Chevron Ltd. et al (1975), 1975 CanLII 1040 (AB SCTD), 59 D.L.R. (3d) 140, at 143-44; and Bakery Union v. Atlantic Sugar (1960), 1960 CanLII 709 (NB CA), 25 D.L.R. (2d) 308 (N.B.C.A.), at 312.

As communicated to the parties at the prehearing conference, I declined to state a case to the Divisional Court. In my opinion it was not essential, in order to resolve the dispute between the parties, that the legal issues be referred to the Divisional Court. This is not a case involving a lack of legal expertise on the part of the Arbitrator or Director’s Delegate. As the appeal involves primarily questions of interpretation of the Insurance Act and the regulations thereunder, it was my view that these matters could and should be determined by the tribunal administering the legislation.

I was also of the view that, the applicant having elected under section 281 of the Insurance Act to resolve his dispute with the insurer by way of the statutory dispute resolution process instead of proceeding to court, he should not now seek to substitute the views of the Divisional Court for those of the forum chosen.

III. ARGUMENT AND FINDINGS

Oral argument was heard on April 16, 1992. At the hearing, the Appellant advanced three major arguments in support of his position that the Arbitrator erred in law in holding that the Appellant was not entitled to no-fault benefits under section 21 of the No-Fault Benefits Schedule. First, it was argued that the Arbitrator erred in departing from the literal meaning of section 21 and interpreting the provision with reference to, inter alia, the intention of the Legislature. Secondly, it was contended that the Arbitrator exceeded her jurisdiction in determining that the action commenced by the Appellant in respect of his injuries was not a bona fide action, and that, hence, the Appellant did not qualify for no-fault benefits under the portion of section 21 that requires an insurer to pay such benefits “until the resolution of any action brought by the person in any court to recover for personal injuries ...”. Finally, the Appellant argued that the Arbitrator failed to consider the argument that the Appellant was entitled to no-fault benefits under that portion of section 21 that obligates an insurer to pay no-fault benefits “until the person receives payments under a workers’ compensation law or plan...”.

Prior to the commencement of oral argument on points of law, there was some disagreement among the parties concerning the facts and findings of fact as set out in the Arbitrator’s Decision. Counsel for the Appellant, Mr. Fyshe, referred to the following statements by the Arbitrator.

At pages 5-6: “It was agreed by both sides that the Applicant’s injuries, at this point, are probably not sufficient to meet the threshold criteria that would allow him to recover damages for bodily injury, under section 231a [now section 266] of the Insurance Act. However, the Applicant pointed out that it is still too early to fully evaluate the ultimate effects of his injuries.”
At page 7: “The Applicant conceded that his major reason for starting the court action was to collect no-fault benefits.”
And at pages 24-25: “The Applicant has conceded that he launched the court action in question not for the purpose of actually attempting to recover damages, but for the purpose of qualifying for no-fault benefits. Therefore, I find that it cannot be considered an action, `brought ... to recover for personal injuries’ pursuant to Section 21, since the action does not pertain to bona fide threshold-type injuries.”

With respect to the statement at page 7, Mr. Fyshe agreed that the collection of no-fault benefits was the Appellant’s major reason for commencing an action at the time proceedings were instituted; he stated, however, that it must be understood that it was at that time too early to ascertain the full extent of the Appellant’s injuries. Mr. Fyshe disagreed with the Arbitrator’s finding at pages 24-25 that the Appellant conceded that he “launched the court action ... not for the purpose of actually attempting to recover damages, but for the purpose of qualifying for no-fault benefits.” Mr. Fyshe maintained that there was no concession that the Appellant had no intention to recover damages.

Counsel for the Respondent, Mr. Leck, disagreed strongly with this position, maintaining that the Arbitrator had correctly stated the facts as agreed by the parties. It was pointed out that the Notice of Appeal did not state that the Appellant objected to the Arbitrator’s findings of fact. Accordingly, the facts should be accepted as set out by the Arbitrator.

It would appear that the parties agreed to a statement of facts, which was read into evidence at the arbitration hearing. There is no written record of the agreed statement of facts; nor is there a transcript of the proceedings before the Arbitrator. In the absence of a record relating to the issue, and in view of the disagreement between the parties and the Appellant’s failure to raise his objections in the Notice of Appeal, I accept the facts as found by the Arbitrator. Accordingly, for purposes of this appeal, I accept that the Appellant conceded that his purpose in launching the court action was to qualify for no-fault benefits and not to recover damages.

Having so found, I turn to consider the arguments surrounding the interpretation of section 21 of the No-Fault Benefits Schedule.

Interpretation of Section 21

The Appellant argued that the Arbitrator erred in interpreting section 21 of the No-Fault Benefits Schedule. Section 21 should be read in conjunction with section 20. These sections provide:

Section 20

The insurer will not pay benefits under this Schedule in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers’ compensation law or plan.

Section 21

(1) Despite section 20, the insurer will pay full benefits under this Schedule to a person described in that section until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers’ compensation claim arose or until the person receives payments under a workers’ compensation law or plan if,

(a) the person makes an assignment to the insurer of any benefits under any workers’ compensation law or plan to which he or she is or may become entitled as a result of the accident, and

(b) the administrator or board responsible for the administration of the workers’ compensation law or plan approves the assignment.

(2) the amount of no-fault benefits recoverable by the insurer under the assignment in subsection (1) shall be determined in accordance with the following formula:

A = T - C

Where,

A = amount recoverable

T = total compensation for personal injury received by the insured person under all contracts of automobile insurance excluding any amount received as a special award under subsection 242d(10) or 242e(7) of the Insurance Act and any amount received as interest;

C =‘compensation for personal injury the insured person would have recovered under all contracts of automobile insurance had the no-fault benefits not been paid.

Reference should be made also to section 10 of the Workers’ Compensation Act, R.S.O. 1990, c.W.11, which provides in part:

10.-(1) Where an accident arising out of and in the course of a worker’s employment happens to the worker under such circumstances as entitle the worker or his or her dependants to an action against some person other than the employer, or an executive officer or director thereof, the worker or his or her dependants, if entitled to benefits under this Part, may claim such benefits or may bring such action.

(2) If less is recovered and collected by a judgment in the action or by settlement than the amount of benefits to which the worker or his or her dependants are entitled under this Part, the difference between the amount recovered and collected and the amount of such benefits is payable to the worker or his or her dependants.

The Appellant, Respondent and Intervenors agreed that section 20 of the No-Fault Benefits Schedule codifies the law governing the right of a person injured in the course of employment to claim no-fault benefits under a motor vehicle insurance policy, as that law existed prior to the introduction in Ontario of the current no-fault threshold system of motor vehicle accident compensation. That law, as enunciated by the Supreme Court of Canada in Madill v. Chu, 1976 CanLII 32 (SCC), [1977] 2 S.C.R. 400, was that an injured worker who was entitled to receive benefits under any workers’ compensation law or plan was not entitled to claim no-fault benefits under a motor vehicle insurance policy, regardless of whether the worker elected to claim workers’ compensation benefits or proceeded to seek recovery in tort.

The parties and intervenors agreed also that section 21 represents an exception to the principle enunciated in section 20. Section 21 states that, despite section 20, and subject to the conditions specified in clauses (a) and (b) of section 21(1), the insurer will pay full benefits under the No-Fault Benefits Schedule to a person described in section 20 (i.e., a person who is “entitled to receive benefits under any workers’ compensation law or plan”), in the following circumstances:

until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers’ compensation claim arose (hereinafter sometimes referred to as the “first branch” of section 21); or
until the person receives payments under a workers’ compensation law or plan (hereinafter sometimes referred to as the “second branch” of section 21).

The Appellant argued that the plain wording of section 21 compels the conclusion that no-fault benefits are payable by an insurer, notwithstanding section 20, if the insured either (a) commences an action for damages for personal injuries, in which case benefits are to be paid until the resolution of the action; or (b) is not in receipt of workers’ compensation benefits, in which case benefits are to be paid until the insured actually receives workers’ compensation benefits. The Appellant contended that the Arbitrator erred in holding that, before benefits are payable under section 21, the insured must have commenced a bona fide action to recover damages in tort in respect of threshold-type injuries. It was the position of the Appellant that, not only is there no requirement that any action commenced involve a bona fide claim for damages, but there is no requirement that an action be commenced at all. Under the second branch of section 21, it was asserted, an insured is entitled to no-fault benefits so long as he or she is not in receipt of workers’ compensation benefits.

The Appellant stated that it is a fundamental rule of statutory interpretation that, where the language of a provision is clear and unambiguous, the plain language of the provision must be adhered to, regardless of any anomalies or absurdities to which a literal construction may give rise. Three cases were cited in support of this proposition.

The first case is Grey v. Pearson (1857), 6 H.L.C. 61, a decision of the House of Lords dealing with the construction of a will. In that case, Lord Wensleydale made the following statement (H.L.C., at 106):

I have been long and deeply impressed with the wisdom of the rule, now, I believe, universally adopted -- at least, in the courts of law in Westminster Hall, that in construing wills, and indeed statutes, and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity or inconsistency, but no further.

This statement, often referred to as the “golden rule” of statutory construction, has been cited by the courts on numerous occasions and is discussed further below.

A second judicial pronouncement to which I was referred is that of Lord Esher, M.R., in The Queen v. The Judge of the City of London Court, [1892] 1 Q.B. 273. Referring to a decision of the English Court of Appeal, The Alina, 5 Ex. D. 227, which held that it was possible to depart from the clear and unambiguous words of a statute where to follow them would produce a manifest absurdity, Lord Esher stated (at 290):

Now, it seems to me that it was decided by the Court of Appeal upon, first of all, this new rule of interpretation. Jessel, M.R., says that the words of s. 2 are quite clear, and that, if the words of an Act of Parliament are clear, you must take them in their ordinary and natural meaning, unless that meaning produces a manifest absurdity. Now, I say that no such rule of construction was ever laid down before. If the words of an Act are clear, you must follow them, even though they lead to a manifest absurdity. The Court has nothing to do with the question whether the legislature has committed an absurdity. In my opinion, the rule has always been this -- if the words of an Act admit of two interpretations, then they are not clear; and if one interpretation leads to an absurdity, and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity, and will adopt the other interpretation. If the learned judge meant to say that, when the meaning of general words is (if you look at them by themselves) clear, that determines their construction at once, even though from the context -- from other parts of the same Act -- you can see that they were intended to have a different meaning; if he meant to say that you cannot look at the context -- at another part of the Act -- to see what is the real meaning, then again I say he has laid down a new rule of interpretation, which, unless we are obliged to follow it in the particular case, I would not follow.

In the third case to which I was referred, Lumsden v. Commissioners of Inland Revenue, [1914] A.C. 877, Viscount Haldane, L.C., stated (at 892):

My Lords, it is no doubt true that there are cases of construction where the natural meaning of the words of a statute is rejected, and another meaning not expressed by the words taken in their ordinary sense is read in. That occurs where the context and scheme of the statute as a whole may be read as consistent. But a mere conjecture that Parliament entertained a purpose which, however natural, has not been embodied in the words it has used if they be literally interpreted is no sufficient reason for departing from the literal interpretation.

On the basis of these pronouncements, the Appellant submitted as follows: (1) that where the words of a statute are clear and unambiguous, it is not permitted to depart from the plain meaning of the words employed, even to avoid a manifest absurdity; (2) that only where the words employed are capable of more than one meaning may an interpretation be adopted that seeks to avoid an absurdity; and (3) that, even where words are unclear or ambiguous, one may look only to other provisions of the legislation to ascertain the meaning of the words in question; one may not seek the intention of the legislature in sources extraneous to the statute. In the view of the Appellant, therefore, the Arbitrator erred in departing from the plain meaning of the clear and unambiguous words of section 21, and in interpreting that provision with reference to the intention of the legislature in an effort to avoid absurdities to which, in her subjective view, the Appellant’s interpretation gave rise.

Counsel for the Respondent, whose submissions concerning the interpretation of section 21 were adopted by the Intervenors, argued that the nineteenth century judicial pronouncements set out above are overruled by section 10 of the Ontario Interpretation Act, R.S.O. 1990, c. I.11, which provides:

Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of anything that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

It was argued, on the basis of section 10, that in order to ascertain the meaning of the words employed, it is necessary to go beyond the four corners of the legislation. It should be noted, however, although the matter was not the subject of argument before me, that section 10 of the Interpretation Act does not appear to apply to the No-Fault Benefits Schedule. Section 1(2) of the Interpretation Act, dealing with the application of certain sections of the Act to regulations, does not include section 10 within the list of applicable provisions.

The Respondent referred to Metropolitan Toronto School Board v. Metropolitan Separate School Board (1987), 20 O.A.C. 400, a case in which the Ontario Court of Appeal interpreted a legislative provision broadly, rather than literally, “in light of [its] purpose and in a manner which gives effect to the spirit of the legislation”. The legislative provision in question was stated by the Court to be ambiguous, however; moreover, it is not apparent from the report of the decision whether the purpose of the legislation was ascertained from a reading of the legislation or from external sources.

The Respondent referred also to certain principles of statutory interpretation, as set out in 31 Canadian Encyclopedic Digest (Ont. 3d), in sections 71 and 72, 81 and 82, 99, and 167. I have read this material and considered its applicability to the legislative provision in question.

The “plain meaning” or “literal” rule of statutory interpretation, as expounded in such cases as The Queen v. The Judge of the City of London Court, referred to above, requires adherence to the grammatical and ordinary sense of words that are clear and unambiguous, regardless of any absurdity that may result. The “golden rule” enunciated by Lord Wensleydale in Grey v. Pearson restates the literal rule, but qualifies it, permitting departure from the ordinary and grammatical sense of words employed where adherence “would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument ...”.

There is some debate as to the scope of the golden rule qualification. Driedger, Construction of Statutes (2d ed., 1983), makes a strong case that “absurdity”, as employed in the golden rule, refers to objective absurdity in the sense of disharmony or inconsistency between the provision in question and the remainder of the statute, or between provisions of the statute and its avowed object or purpose: Driedger, supra, Ch.2, at 47-66. Nevertheless, Driedger concedes that there is ample support in the jurisprudence for a subjective interpretation of absurdity, stating (at 55-56):

Yet, Cross [Statutory Interpretation (1976), at 43] states it to be a rule that if the judge considers that the application of the words in their ordinary sense would produce an absurd result that cannot reasonably be supposed to have been the intention of the legislature, he may apply them in any secondary meaning they are capable of bearing. There is much judicial support for this statement, even though it is contrary to what is said in many decisions ... .

The difficulty with such a `rule’ is that what one judge disbelieves another will believe.

In Driedger’s view, resort to subjective standards of absurdity is justified in very limited circumstances only. He states (at 85-86, emphasis added):

The golden rule qualification does not permit a departure from the literal meaning in order to escape the consequences of the application of the statute that are considered to be absurd or unjust by subjective standards. ...

If the meaning is clear, the consequences of the application of the words to specific facts are immaterial. ... Only when there is an ambiguity, obscurity or inconsistency that cannot be resolved by objective standards is it permissible to resort to subjective standards in order to avoid unreasonable consequences ... it is not legitimate to use consequences as an excuse to place an unreasonable construction on words that can have only one reasonable grammatical construction.

A third “rule” or approach to statutory interpretation, the “purpose” approach, involves ascertaining the meaning of a legislative provision in light of the object or purpose of the legislation. At arbitration and on appeal, both parties invoked the purpose of the legislation in support of their respective interpretations of section 21 of the No-Fault Benefits Schedule.

Driedger concludes that the three former “rules” or approaches to statutory construction -- the purpose approach, the literal approach, and the golden rule approach -- are combined in a single, modern principle or approach, which he describes as follows (at 87, emphasis added):

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. This principle is expressed repeatedly by modern judges ... Earlier expressions, though in different form, are to the same effect; Lord Atkinson in Victoria (City) v. Bishop of Vancouver Island [[1921] A.C. 384, at 387] put it this way:

In the construction of statutes their words must be interpreted in their ordinary grammatical sense, unless there be something in the context, or in the object of the statute in which they occur, or in the circumstances with reference to which they are used, to show that they were used in a special sense different from their ordinary grammatical sense.’

It will be noted that the proposition that it is appropriate to depart from the natural meaning of words where the context and scheme of the legislation as a whole suggest that the words were meant to have another interpretation is recognized in the excerpts from The Queen v. The Judge of the City of London and Lumsden cases, submitted by the Appellant and set out at pages 15-16 of this decision.

Applying these principles to the construction of the “first branch” of section 21 of the No-Fault Benefits Schedule, it must be determined first whether, as contended by the Appellant, the words “until the resolution of any action brought by the person in any court to recover for personal injuries” are clear and unambiguous, and therefore must be followed regardless of any absurdity to which they may give rise.

In so determining, it is necessary to read the words in the context of the legislation as a whole, “for only then can it be said that the words are or are not clear and unambiguous ... [A] provision when read alone may appear to be clear and unambiguous, but when read in its full context it turns out that it is not”: Driedger, supra, at 89. Driedger continues (emphasis added):

To say that a statute must be read as a whole means not merely that the meaning of the words contained in a particular provision is to be gathered from reading them in their verbal and grammatical context; it means that the substance of the particular provision must be seen in the context of the ideas expounded in the whole Act, because’, as Lord Reid said in Inland Revenue Commissioners v. Hinchy [[1960] A.C. 748, at 766] one assumes that in drafting one clause of a Bill the draftsman had in mind the language and substance of other clauses, and attributes to Parliament a comprehension of the whole Act’.

I have concluded that the words “any action brought...to recover for personal injuries” used in section 21 of the No-Fault Benefits Schedule are not clear and unambiguous when read in the context of other provisions of the legislation.

The relevant provisions are sections 266 and 268 of the Insurance Act, portions of which are reproduced below:

266.-(1) In respect of loss or damage arising directly or indirectly from the use or operation, after the 21st day of June, 1990, of an automobile and despite any other Act, none of the owner of an automobile, the occupants of an automobile or any person present at the incident are liable in an action in Ontario for loss or damage from bodily injury arising from such use or operation in Canada, the United States of America or any other jurisdiction designated in the No-Fault Benefits Schedule involving the automobile unless, as a result of such use or operation, the injured person has died or has sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature.

(3) In an action for loss or damage from bodily injury arising directly or indirectly from the use or operation of an automobile, a judge shall, on motion made before or at trial, determine if the injured person has, as a result of the accident, died or has sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature.

(4) Even though a defence motion under subsection (3) is denied, the defendant may, at trial, in the absence of the jury, and following the hearing of evidence, raise the defence provided in subsection (1).

268.-(1) Every contract evidenced by a motor vehicle liability policy shall provide for the no-fault benefits set out in the No-Fault Benefits Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.

The object of the Act, as ascertained from these provisions, is twofold: (1) the abolition of liability in tort for personal injuries sustained as a result of the operation of a motor vehicle, except for injuries that meet the conditions set out in section 266(1) (so-called “threshold” injuries); and (2) the provision of benefits to injured insured persons regardless of fault, “subject to the terms, conditions, provisions, exclusions and limits” set out in the No-Fault Benefits Schedule. With these provisions must be read sections 20 and 21 of the Schedule, which set out the limitations on the liability of an insurer to provide no-fault benefits under section 268(1) in respect of persons entitled to receive workers’ compensation benefits. Sections 20 and 21, it will be recalled, provide that an insurer is not liable to pay no-fault benefits in respect of any person entitled to receive workers’ compensation benefits, subject to the exceptions set out in section 21(1). It is in the context of the object and scheme of the legislation as a whole that the section 21(1) exceptions to section 20’s denial of no-fault benefits to persons entitled to workers’ compensation benefits must be construed.

In light of the abolition by section 266(1) of the right to recover damages for non-threshold personal injuries, it is not at all clear that the words “any action brought...to recover for personal injuries” contained in section 21(1) of the No-Fault Benefits Schedule refer to an action in respect of injuries that clearly would not meet the threshold. In the context of the Insurance Act as a whole, the more reasonable interpretation of these words is that ascribed to them by the Arbitrator. To paraphrase Lord Reid in the excerpt from Driedger reproduced above at page 22, one may assume that in drafting section 21 of the No-Fault Benefits Schedule, the drafter had in mind the language and substance of section 266(1) of the Insurance Act.

Accordingly, I find that the Arbitrator did not err in interpreting section 21 of the No-Fault Benefits Schedule as requiring the institution of a bona fide action to recover damages for threshold-type injuries. An interpretation of section 21 that would condition the receipt of no-fault benefits upon the initiation of an action that has no chance of meeting the threshold is inconsistent with section 266(1) of the Insurance Act, which permits recovery for personal injuries only in respect of injuries that meet the threshold.

The Appellant objected that the Arbitrator erred in construing the effect of the formula for recovery set out in section 21(2) of the No-Fault Benefits Schedule, and in referring to the headings of sections 20 and 21 of the Schedule for guidance in interpreting those provisions. I do not deal with these objections, as I consider the Arbitrator’s findings to be sustainable on the basis that the interpretation adopted is that which best achieves harmony with other provisions of the legislation as a whole, and with the object and scheme of the legislation as expressed by those provisions. That the Arbitrator construed section 21 in the context of the Act as a whole is evident from the following statement, found at page 24 of her decision:

Therefore I find that Section 21, correctly construed, must refer to the resolution of `any action brought by the person in any court to recover for personal injuries resulting from the accident’ when that action bona fide pertains to a threshold-type injury. This is a logical reading because, although individuals are not barred from bringing actions in non-threshold cases, they are statutorily barred from recovering damages [by section 266(1)]. Normally, one would not expect an individual to initiate a court suit against another (an expensive and complicated process) without some realistic expectation of recovery or settlement.

The Appellant argued that, regardless of whether an action to recover for personal injuries has been instituted within the meaning of section 21 of the No-Fault Benefits Schedule, he is entitled to no-fault benefits, on the basis of a literal reading of the “second branch” of section 21, so long as he is not in receipt of payments under a workers’ compensation law or plan.

A number of arguments were advanced in response to the contention that no action need be instituted by an injured worker in order to qualify for no-fault benefits. The Respondent referred to section 10 of the Workers’ Compensation Act, set out previously. This provision states that where an injured worker is entitled to bring an action against another person, he or she may, if entitled to claim workers’ compensation benefits under the Act, either claim such benefits or institute an action. The section does not contemplate the possibility of a third option -- that is, a claim for no-fault benefits in the absence of an action to recover for personal injuries.

Reference was made also to O’Donnell, Automobile Insurance in Ontario (1991), at 266, and to a Background Paper prepared by the Policy and Planning Branch of the Ministry of Financial Institutions (February 19, 1990) and entered into evidence at the arbitration stage by Counsel for the Respondent (see letter from B. Leck to F. Rotter, July 26, 1991). These sources suggest that the reason for the enactment of section 21 was to provide no-fault benefits to a worker sustaining threshold injuries in a motor vehicle accident during the pendency of an action to recover damages in tort.

Both the Respondent and the IBC argued that the interpretation of section 21 advanced by the Appellant -- that a worker who is not in receipt of workers’ compensation benefits is entitled to no-fault benefits -- is inconsistent with section 20 of the No-Fault Benefits Schedule. As will be recalled, the Supreme Court of Canada in Madill v. Chu, 1976 CanLII 32 (SCC), supra, interpreted a provision similar to section 20 as precluding liability for the payment of no-fault benefits to an injured worker entitled to receive workers’ compensation benefits, but not in receipt thereof.

As to the correct interpretation of section 21, two alternatives were suggested. The first is set out in O’Donnell, supra, at 274 as follows:

In a small percentage of cases the automobile insurer may believe that its insured was a worker in the course and scope of his employment at the time that the injury occurred whereas the Workers’ Compensation Board will be of a different view or may not have made up its mind at all. So that the insured worker does not fall between two stools, the government had to determine which of the Workers’ Compensation Board or the automobile insurer should be paying benefits to the worker while the dispute was resolved. The decision was that automobile insurers should pay no-fault benefits under the automobile policy while the automobile insurer, the worker and the Workers’ Compensation Board resolved the question as to which one of them was liable to pay benefits to the worker. The obligation of the automobile insurer to pay no-fault benefits is found in s. 21 of the No-Fault Benefits Schedule. Deleting the inapplicable words, the section becomes `Despite section 20, the insurer will pay full benefits under this Schedule to a person described in [s. 20]...until the person receives payments under a workers’ compensation law or plan...’.

A second possibility suggested was that the second branch of section 21 is intended to address the situation where an injured worker, having instituted an action to recover in respect of threshold-type injuries, abandons the action for some reason and re-elects to receive workers’ compensation benefits. In support of this argument, Mr. Samis suggested on behalf of the IBC that the words “the person” employed in the second branch of section 21 refer to the person who has instituted an action under the first branch of the provision.

I have concluded that the Appellant’s interpretation of the second branch of section 21 of the No-Fault Benefits Schedule cannot be accepted. As discussed in the context of the construction of the first branch of this provision, the words of the second branch must be read in the context of the legislation as a whole, and an interpretation must be adopted that avoids repugnancy or disharmony with other provisions of the legislation. In my view, the interpretation of section 21 advanced by the Appellant renders section 20 meaningless and must be rejected. Moreover, it is clear that the Appellant falls within neither of the alternative interpretations of the second branch of section 21 advanced before me. Accordingly, I find that the Appellant cannot claim no-fault benefits under section 21 of the No-Fault Benefits Schedule on the basis that he is not in receipt of payments under a workers’ compensation law or plan.

Jurisdiction of the Arbitrator

The Appellant contended that, even if section 21 of the No-Fault Benefits Schedule is interpreted to require the initiation of a bona fide action in respect of threshold-type injuries, the Arbitrator possessed no jurisdiction to determine whether the injuries in question were of the sort that would satisfy the conditions specified in section 266(1) of the Insurance Act. In support of this position, the Appellant referred to section 266(3) and (4) of the Act, set out previously, which reserve to a judge in a personal injury action the power to determine whether the threshold requirements have been met.

The Arbitrator held that, in determining that the Appellant was not entitled to no-fault benefits under section 21, she was not usurping the jurisdiction of a judge. She stated (at pages 24-25):

I do not accept that, by so interpreting Section 21, I am usurping the jurisdiction reserved for a judge and making a threshold determination in a particular case, contrary to Section [266(1)]. I am not determining whether this Applicant has sustained a threshold-type injury which leaves him permanently or seriously impaired or disfigured. At most, I am determining that in the Applicant’s case, a bona fide action `to recover for personal injuries resulting from the accident’ has not been brought.

I am deciding whether the Applicant has launched a court action that raises a justiciable threshold issue with respect to loss or damage for personal injury under Section [266(1)]. By so doing, I am exercising the statutory authority conferred on me to determine whether this Applicant is entitled to no-fault benefits under Section 21 of the No-Fault Benefits Schedule.

The Applicant has conceded that he launched the court action in question not for the purpose of actually attempting to recover damages, but for the purpose of qualifying for no-fault benefits. Therefore, I find that it cannot be considered an action `brought...to recover for personal injuries’ pursuant to Section 21, since the action does not pertain to bona fide threshold-type injuries.

It was the Appellant’s contention that the onus should be on an insurer to establish that an action has been brought in bad faith or does not raise a justiciable threshold issue with respect to loss or damage for personal injury under section 266(1) of the Insurance Act. The Appellant argued that the proper procedure to deal with these issues is an application to dismiss under Rule 25.11 of the Rules of Civil Procedure. Under the Rules of Civil Procedure, it was stated, an established body of jurisprudence is available to deal with the dismissal of proceedings brought in bad faith or disclosing no cause of action. The Insurance Act and the No-Fault Benefits Schedule, on the other hand, contain no provisions authorizing dismissal or providing guidance to an Arbitrator as to how such jurisdiction should be exercised.

The Respondent argued that the jurisdiction reserved to a judge under section 266(3) of the Insurance Act is to make a threshold determination for purposes of the action in tort. The Arbitrator’s determination does not purport to deal with the tort action, but rather with entitlement to no-fault benefits. The tort action is unaffected by the determination of the Arbitrator, who has jurisdiction under the Act to make a factual determination that an action to recover for personal injuries has no reasonable prospect of meeting the threshold.

The Respondent and the IBC referred to a number of legislative provisions as providing the basis for the Arbitrator’s jurisdiction. The Respondent referred to section 279(4) of the Insurance Act, which provides:

279.(4) The Director and every arbitrator shall determine issues before them by order and may make an order subject to such conditions as are set out in the order.

The IBC referred to section 282(3) of the Insurance Act, and to section 28(b) of the Interpretation Act, which provide respectively as follows:

282.(3) The arbitrator shall determine all issues in dispute and such other issues as the parties may agree.

In every Act, unless the contrary intention appears,

(b) where power is given to a person, officer or functionary to do or to enforce the doing of an act or thing, all such powers shall be understood to be also given as are necessary to enable the person, officer or functionary to do or enforce the doing of the act or thing;

In the present case, the Respondent disputed the bona fides of the Appellant in commencing an action for personal injuries. I have concluded that the Arbitrator had jurisdiction, under section 282(3) of the Insurance Act, to resolve this dispute by determining that the action commenced was not an “action brought...to recover for personal injuries” within the meaning of section 21 of the No-Fault Benefits Schedule. In view of the Arbitrator’s factual finding that the Appellant conceded that his purpose in commencing the action was to qualify for no-fault benefits and not to recover personal injury damages, I find that the Arbitrator did not err in concluding that the action was not a bona fide “action brought...to recover for personal injuries”.

Although the foregoing finding is sufficient to dispose of the matter on the facts of the present case, I wish to comment upon a proposition advanced before me to the effect that an Arbitrator is authorized, and indeed mandated, by section 21 of the No-Fault Benefits Schedule to inquire into the viability of an action brought to recover for personal injuries. It was argued on behalf of the IBC that it is open to an Arbitrator under section 21 to look at the pleadings in an action commenced by an applicant for no-fault benefits, and to deny such benefits on the basis that the action is not viable for any of a number of reasons. These reasons include not only the seriousness of the injury, but also such matters as the likelihood of establishing liability on the part of the defendant and the solvency of the defendant.

In my view, this proposition goes too far, and this decision should not be viewed as endorsing it. Section 21 provides that, notwithstanding section 20, the insurer “will pay full benefits...until the resolution of any action brought...to recover for personal injuries...”. I have held that, because of section 266(1) of the Insurance Act, the phrase “any action brought...to recover for personal injuries” may be interpreted as referring to a bona fide action in respect of threshold-type injuries. There is, however, no suggestion in section 21 of the No Fault Benefits Schedule or elsewhere in the legislation that the phrase is to be interpreted to mean an action that is viable in terms of the defendant’s solvency or liability or otherwise. In my opinion, nothing in the legislation authorizes an inquiry into the general viability of an action and the denial of benefits on the grounds suggested.

Moreover, while I have concluded that section 21 authorizes denial of no fault-benefits where a non-bona fide action is commenced in respect of injuries that clearly do not meet the threshold, a finding that benefits should be denied on this basis should, in my view, be made cautiously.

There are a number of reasons for this view. First, as argued by the Appellant, the requirement under section 21 that an action be commenced as a pre-condition to the receipt of no-fault benefits may result in an action being commenced prematurely. Injuries “develop”; and an injury that may not meet the threshold at the time an action is commenced may well satisfy the conditions of section 266(1) of the Insurance Act at the time the action is heard. Secondly, there is as yet in Ontario no judicial decision dealing with the meaning of the threshold requirements set out in section 266(1). It may take many years for a comprehensive and authoritative judicial definition of the threshold to evolve.

Perhaps most importantly, while a denial of no-fault benefits to an injured worker will not in theory affect the prosecution of his or her action in tort, in practice, denial of no-fault benefits may well force the abandonment of a tort claim. Injured persons require financial assistance to meet their daily living requirements while an action is being litigated. Moreover, there is a particular difficulty in respect of injuries “at the margin”--that is, injuries that may or may not meet the threshold. A system that permits insurers to resist payment of no-fault benefits to an injured worker on the basis that the action is unlikely to succeed may operate to deter workers from electing to pursue bona fide actions in tort where there is some doubt as to whether the injuries sustained meet the threshold.An injured worker, faced with the prospect of pursuing a tort action without the assistance of no-fault benefits, may elect to forego the tort claim entirely in order to receive workers’ compensation benefits.

The requirement that an injured worker who has a claim in tort elect either to proceed in tort and forego workers’ compensation benefits or to claim workers’ compensation benefits and forego the tort claim predates the introduction of the current system of motor vehicle accident compensation. Under the former system, however, it was the practice of the Workers’ Compensation Board to pursue meritorious tort claims on behalf of injured workers. As a result, a worker had the advantage of both interim maintenance during the litigation of the tort claim and damages in the event of a successful claim. Under the present system, the Workers’ Compensation Board’s right of subrogation has been abolished: Insurance Act, section 267(5). Accordingly, a worker who elects in favour of workers’ compensation benefits has no hope of any recovery in tort.

In order not to deter the assertion and prosecution of meritorious tort claims, and to avoid a refusal of benefits on the basis of a premature assessment of the likelihood of a claim’s meeting the threshold, it is only in the clearest of cases that no-fault benefits should be denied on the ground that an action commenced is not a bona fide action brought to recover damages in respect of threshold-type injuries.

Expenses

The Appellant is the only participant to whom an award of expenses of this appeal may be made under the Insurance Act. By section 283(7) of the Act, the provisions of section 282(11), empowering an arbitrator to award to an insured person expenses incurred in respect of an arbitration proceeding, are made applicable to appeals before the Director. Accordingly, neither the Respondent nor either of the Intervenors is entitled to an award of expenses.

The Appellant requests his expenses of this appeal in the maximum amount allowed under the regulations, regardless of the success of the appeal. The Appellant argues that the novelty and importance of the legal issues justifies an award of expenses. The Appellant contends also that the involvement of the Intervenors is an additional factor favouring an award of expenses in the maximum amount permitted.

The Respondent argues that expenses should be awarded to the Appellant only in the event the appeal is successful.

The principles governing an award of expenses incurred in connection with an arbitration hearing were discussed by Arbitrator Naylor in McCormick v. Economical Mutual Insurance Company, File No.A-000139 (October 2, 1991), at pages 23-24, and approved by the Director in Calogero v. The Co-Operators General Insurance Company, File No. P-000251 (February 13, 1992). In McCormick it was held that, in light of the purpose of the legislative scheme to facilitate access to the resolution of disputes regarding no-fault benefits, an award of expenses should be made to an applicant unless, in the circumstances of a particular case, the application for arbitration was manifestly frivolous or vexatious or the applicant’s conduct unreasonably prolonged the proceedings.

Whether different principles should govern an award of expenses on appeal has not been the subject of any decision by this tribunal. In Calogero, conduct on the part of an unsuccessful appellant that made the hearing more expensive, longer and more contentious than was reasonable in the circumstances was held to disentitle the appellant to an award of expenses of the appeal.

I conclude that, notwithstanding the failure of this appeal, the Appellant should be awarded his expenses of the appeal proceedings. The appeal involved important, difficult and novel points of law. While I am not convinced that the involvement of the Intervenors added substantially to the expenses of the Appellant, the fact of intervention underscores the importance of the legal issues involved. As noted by the Arbitrator, the Appellant “has not acted either improperly or illegally by initiating a court action and otherwise attempting to obtain access to no-fault benefits in this case. He has acted within his rights in attempting to maximize his accident benefits by testing the no-fault benefits schedule”. Therefore, the Appellant is entitled to his expenses of the appeal proceedings as prescribed by Ontario Regulation 275/90 and Schedule 1 of the Dispute Resolution Practice Code.

IV. ORDER

The appeal from the decision of Frederika Rotter, Arbitrator, is dismissed.
The Appellant shall repay the no-fault benefits paid by the Respondent.
The Appellant is entitled to his expenses of this appeal.

June 1, 1992

M. Patricia Richardson

Director’s Delegate

Stephen Salmon v. Toronto Transit Commission (Markel Insurance), 1992 ONICDRG 18

Case Summary