Neutral Citation: 1992 ONICDRG 22

File No. A-000468

BETWEEN:

MICHAEL MORIN

Applicant

and

THE PERSONAL INSURANCE COMPANY OF CANADA

Insurer

PRELIMINARY DECISION

The Applicant, Michael Morin, was injured in a motor vehicle accident on September 1, 1990. He applied for accident benefits payable under Regulation 273/90, enacted under the Ontario Insurance Act, R.S.O. 1990, c. I.8, (the "No-Fault Benefits Schedule").

At the time of the accident, the Applicant was receiving disability benefits under the Canada Pension Plan ("CPP"), and Family Benefits (GAINS-D) under the Ontario Family Benefits Act. The Insurer refused to pay accident benefits on the grounds that the Applicant's Family Benefits and CPP payments constituted "payments for loss of income" which were deductible from any accident benefits payable to the Applicant under section 13 of the legislation.

The Insurer also maintained the Applicant was not eligible for accident benefits under section 13 of the No-Fault Benefits Schedule because he was not "substantially disabled" within the meaning of the legislation.

The Applicant applied for mediation of his dispute with the Insurer. The mediation was unsuccessful, and the Applicant subsequently applied for the appointment of an arbitrator.

The parties agreed that the arbitrator should initially deal with the issue of the deductibility of the CPP and Family Benefits payments from the Applicant's benefits. Once this issue has been resolved, the parties will, if necessary, deal with the issue of the Applicant's disability under section 13.

The preliminary issues, therefore, to be determined at the arbitration hearing were:

Are the Family Benefits payments received by the Applicant "payments for loss of income" within the meaning of section 13(3)(a) of the legislation and, as such, deductible from any accident benefits received by the Applicant under section 13?
Are the CPP payments received by the Applicant "payments for loss of income" within the meaning of section 13(3)(a) of the legislation and, as such, deductible from any accident benefits received by the Applicant under section 13?

The Applicant also claimed interest on any outstanding amounts and his costs of the hearing.

The decision is:

Neither the Family Benefits payments nor the Canada Pension Plan payments received by the Applicant are deductible from the Applicant's weekly accident benefits.

A hearing was held at Ottawa, Ontario, on February 11, 1992, before me, Frederika M. Rotter, Senior Arbitrator.

Present at the hearing were:

Applicant:

Michael Morin

Applicant's Representative:

Stewart M. McMahon

Barrister & Solicitor

Insurer's Representative:

Kevin R. LaRoche

Barrister & Solicitor

Documents Filed:

Report of Mediator, dated September 23, 1991

Application for Appointment of an Arbitration in Form 4, dated September 30, 1991

Response in Form 5, dated October 22, 1991

Casebook of the Insurer, including Cases relied on and an agreed statement of fact

Authorities and Texts:

(a) Cases:

Frezludeen v. Safeco Insurance Company of Canada (1984) 1984 CanLII 2130 (ON HCJ), 47 O.R. (2d) 258

Ralph McCormick v. Economical Mutual Insurance Company O.I.C. File No. A-000139, S. Naylor, Arbitrator

Paese v. United States Fidelity and Guaranty Company (1985) 1985 CanLII 1984 (ON HCJ), 17 C.C.L.I. 1

Parks v. Guarantee Co. of North America (1989) O.J. No. 1511

Pineda v. Co-operators Group Ltd. (1985) 1985 CanLII 2094 (ON HCJ), 51 O.R. (2d) 787

(b) Texts:

Canadian Encyclopedia Digest, Part III, Interpretation of Statutes

Construction of Statutes, 2nd edition, E.A. Driedger, Butterworths 1983

The Facts:

The facts in this case are not in dispute. The Applicant, Michael Morin, was injured in a motor vehicle accident which occurred on September 1, 1990. The Applicant was not working at the time of the accident. He was receiving a CPP disability pension of $145.75 a week, and Family Benefits payments amounting to $81.35 a week.

The Applicant applied for accident benefits under section 13 of the No-Fault Benefits Schedule. The relevant provisions of that section state:

Section 13

(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident, a weekly benefit during the period in which the insured person suffers substantial inability to perform the essential tasks in which he or she would normally engage if he or she meets the qualifications set out in subsection (2).

(3) The weekly benefit under subsection (1) will be $185 less any payments for loss of income, except Unemployment Insurance benefits.

(a) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan; or

(b) received under any sick leave plan.

(emphasis added)

The issues for determination are whether the Applicant's Family Benefits payments and CPP payments constitute payments for loss of income, the amount of which must be deducted from his weekly benefit.

Submissions of Applicant:

Counsel submitted that the Family Benefit payments could not be considered payments for loss of income, since such payments were not employment-related. Family Benefits are payable based on an individual's need, without reference to his or her history of employment or previous income. Therefore, the amount of Family Benefits payments cannot be deducted from weekly benefits payments under section 13.

Counsel conceded that the CPP benefits should properly be considered payments for loss of income. He cited Paese v. United States Fidelity (1985) 1985 CanLII 1984 (ON HCJ), 17 C.C.L.I. 1, a case which dealt with the predecessor section to section 13 of the current legislation. I note that the wording of the legislation in Paese is identical to the current section 13, except for a difference in the amount of the weekly payment. The issue in Paese was whether CPP benefits are payments for loss of income. In that case, the plaintiff Ms. Paese started receiving CPP disability benefits as a result of the accident. McMahon D.C.J. concluded that a disability benefit paid pursuant to the CPP must be considered a benefit payable for loss of income from employment, and therefore was deductible from the no-fault benefit payable to the plaintiff.

Counsel also cited Parks v. Guarantee Co. of North America (1989) O.J. No. 1511 (decision of Holland, J.), as well as the decision of arbitrator S. Naylor in the case of McCormick v. Economical Mutual Insurance Company (1991) O.I.C. File No. A-000139. He indicated that both these cases support the conclusion that CPP benefits are payments for loss of income. However, he argued that these cases are not dispositive of the question whether the payments should be deducted from section 13 benefits under the No-Fault Benefits Schedule.

Counsel argued in particular that the case of McCormick v. Economical Mutual should be distinguished on two grounds:

Arbitrator Naylor did not consider Pineda v. Co-operators Group Ltd. (1985) 1985 CanLII 2094 (ON HCJ), 51 O.R. (2d) 787, in her reasons in McCormick.
McCormick is distinguishable from the present case because it deals with section 12 rather than section 13 benefits.

Pineda was a case where an injured worker who was off work and receiving workers' compensation benefits was subsequently injured in a non work-related automobile accident. The worker claimed no-fault benefits under the former legislation, but the auto insurer argued that she was barred from recovering because of the section of the legislation which provided:

(2) Exclusions

(a) Except as provided in Part III of subsection (2), the Insurer shall not be liable under this section for bodily injury to or death of any person,

(ii) who is entitled to receive the benefits of any workmen's compensation law or plan; or...

Cromarty J. found that this subsection should be construed so as to refer only to workers' compensation benefits received as a result of the accident in question.

Counsel argued that the same reasoning is applicable in this case: namely, that the deduction clause should pertain only when the payment for loss of income arises out of the accident for which no-fault benefits are claimed.

Counsel conceded that arbitrator Naylor, in McCormick, concluded that nothing in the intent and purpose of the legislation warranted that interpretation. However, counsel submitted that the decision in McCormick is not necessarily binding or applicable to the present case.

In discussing the provision of weekly income benefits under section 12 of the legislation, arbitrator Naylor indicated that the purpose of section 12 benefits was to compensate an individual for loss of income from employment. Therefore, all payments for loss of income should be deducted, because otherwise an individual might receive double compensation for the same loss.

Counsel argued that this reasoning is not applicable to section 13 benefits since these benefits are not designed to compensate an individual for loss of income from employment. Benefits under section 13 are not earnings-related: they are provided to persons who are not gainfully employed. Such individuals -- whether they be disabled, students, housewives or retired -- are entitled to a nominal sum not designed to replace lost income, but to compensate them if the accident affects them so that they are disabled from performing the essential tasks in which they would normally engage.

Therefore, counsel argued, the concern about double compensation does not apply in cases under section 13. Making full benefits available, without deduction, to persons injured and eligible under section 13 does not offend against the policy that double compensation is to be avoided, because other payments for loss of income that the individual may be receiving were not designed to and cannot compensate the individual for the loss occasioned by the auto accident.

In fact, deducting other payments for loss of income means that the effect of the current accident on the life of the individual will not be compensated for or recognized.

Therefore, counsel argued, in spite of the fact that the wording authorizing the deduction of payments for loss of income is identical in sections 12 and 13, the wording of those sections should be construed and interpreted differently, because the intent and the effect of those sections are different.

In a separate written submission, dated May 19, 1992, the Applicant detailed his outstanding expenses in connection with the arbitration hearing.

Submissions of Insurer:

The Insurer conceded that the Family Benefits payments received by the Applicant should not be considered a payment for loss of income within the meaning of the legislation.

With respect to the CPP payments, counsel for the Insurer relied on McCormick v. Economical (supra), arguing that the applicable rules of statutory interpretation were correctly set out and followed by arbitrator Naylor. Counsel submitted that the accepted principle, when construing legislation, is that statutory words must be given their ordinary and everyday meaning, unless the result of doing so leads to an absurdity, or to a conclusion which clearly violates the intent and scheme of the legislation.

In this case, counsel argued, arbitrator Naylor properly found that the statutory words are clear and unambiguous. The legislation clearly refers to "any payments for loss of income". Construing those words according to their ordinary and everyday meaning does not lead to an absurd result: on the contrary, the logical result is the intended result.

Counsel submitted that in McCormick, arbitrator Naylor was construing the identical phrase, in a sister section of the same regulation. Logic and consistency demand that the phrase have the same meaning from one section to the next.

Findings:

With respect to the issue of the Family Benefits payments, it has been conceded by the Insurer and I find that such payments do not constitute payments for loss of income, since they are not employment related. In any case, I note that Family Benefits payments are administered by the Ministry of Community and Social Services, and section 14(2) of the No-Fault Benefits Schedule provides:

(2) The insurer will pay benefits under this Part even though the insured person is entitled to, or has received, benefits under an Act administered by the Ministry of Community and Social services for Ontario or under similar legislation in another jurisdiction. O.Reg. 273/90, s. 14.

With respect to the CPP payments received by the Applicant, this case demands that I re-examine the method of calculating weekly benefits, and review the reasoning of my colleague, arbitrator Naylor, in McCormick v. Economical Mutual Insurance Company.

In McCormick, arbitrator Naylor dealt with the question whether "any payments for loss of income" under section 12(4) of the No-Fault Benefits Schedule are deductible from weekly income benefits, notwithstanding that the payments in question flow from an incident or condition unrelated to the automobile accident. In that case, the "payments for loss of income" were workers' compensation benefits, and the injured applicant was claiming weekly income benefits under section 12 of the No-Fault Benefits Schedule -- the section that is applicable to individuals attached to the workforce.

In the present case, we are dealing with a CPP pension, and its effect on section 13 benefits: i.e. benefits to individuals who are generally not employed or attached to the workforce. Clearly, nothing turns on the source of the benefits, so long as the benefits themselves are determined to be "payments for loss of income". In McCormick, arbitrator Naylor found as a fact that the workers' compensation pension received by Mr. McCormick was a payment for loss of income, because it was paid to him in compensation for the economic effect of a work-related injury. The amount of the payment bore a direct relationship to Mr. McCormick's former earnings. Arbitrator Naylor determined that the amount of the workers' compensation benefit should be deducted from Mr. McCormick's benefits under section 12 of the regulation.

Here, the CPP pension received by the Applicant is to some degree related to his previous earnings, and is payable in consequence of the fact that he is currently disabled from his employment. It was conceded by the Applicant that the CPP pension was indeed a "payment for loss of income", pursuant to the reasons in Paese (supra).

Therefore, I must determine whether, following the reasoning in McCormick, the CPP payment is also deductible.

I cannot accept counsel for the Applicant's creative submission that section 13 should be interpreted differently than section 12, because the sections deal with individuals in differing situations. Both sections deal with the calculation of weekly benefits, using identical words and phrases. Common sense dictates that the same words used in a similar context are meant to be interpreted consistently from one section of the legislation to the next.

Authority for this proposition may be found in the chapter on statutes in the Canadian Encyclopedia Digest (3rd) p.76:

§66 The construction of an enactment which produces the greatest harmony and the least inconsistency is that which ought to prevail. A statute should, if possible, be construed so that there may be no repugnancy or inconsistency between its different portions.

Similarly, E.A. Driedger, in Construction of Statutes (Butterworths, 1983) states at p.93: "the same words should have the same meaning".

I conclude therefore that the term "any payments for loss of income" must be construed according to its meaning and context in both sections 12 and 13, and that the words in neither section should be interpreted in isolation of the other.

That being said, the first issue for determination is whether the term "any payments for loss of income", in the context of both sections 12 and 13, is sufficiently ambiguous to admit an interpretation that departs from the strictly literal.

In Pineda v. Co-operators (supra), Cromarty J. found that the reference to an individual who is "entitled to receive the benefits of any workers' compensation law or plan" should be understood to pertain to a situation where the workers' compensation benefits were payable because of the motor vehicle accident in question. He held as follows:

Essentially the question raised by this clause is whether it is intended to preclude recovery of no-fault benefits by a person who happens to be receiving workers' compensation benefits, regardless of cause or, alternatively, if it is intended merely to bar recovery of no-fault benefits by a person who is receiving workers' compensation benefits for the bodily injury sustained in a motor vehicle accident. To state it differently, should the words "who is entitled to receive the benefits of any workers' compensation law or plan" be understood to read "who is entitled to receive the benefits of any workers' compensation law or plan as a result of that bodily injury" or, "who is entitled to receive the benefits of any workers' compensation law or plan as a result of any bodily injury"?

I think the mere asking of this question makes the answer self-evident. If an individual otherwise falls within Part II of Schedule C of the Act, it would be unfair to deny her no-fault benefits merely because she also happens to have a work-related injury, however minor, for which she is receiving workers' compensation benefits. Surely the Legislature could not have intended to deny an individual no-fault benefits as compensation for loss of income due to a severe motor vehicle accident merely because she had temporarily injured a finger on the job and was receiving workers' compensation benefits as a result. It seems clear that the exclusion clause was meant to pertain to the specific injury for which the individual is receiving workers' compensation benefits. This exclusion clause is only likely to come into effect where a worker is injured in consequence of a motor vehicle accident that takes place in the course of their employment.

I conclude that the same logic is applicable to the term "any payments for loss of income" as it occurs in sections 12 and 13. I find that a genuine question exists as to whether the Legislature meant to exclude individuals injured in automobile accidents from receiving weekly benefits, because they happen to be receiving payments for loss of income in relation to a previously existing disability or injury. Therefore, I find that the term "any payments for loss of income" is sufficiently ambiguous to warrant interpretation having regard to the general intent and purpose of the legislative scheme.

Weekly benefits under section 13 are normally payable to individuals who are not employed or regularly connected to the workforce. Thus, section 13 benefits are not designed or meant to compensate for loss of income -- they are rather meant to compensate for an individual's loss of function. Benefits are paid during the period when an insured person suffers a "substantial inability to perform the essential tasks in which he or she would normally engage", as a result of the accident, without necessarily having suffered any economic loss. Therefore payments for loss of income which do not arise as a result of that same accident cannot be viewed as double compensation, since they are in no way connected to the loss that is being compensated for under section 13.

Section 12 benefits may be similarly analyzed. That is, they are not like damages in tort actions, which are meant to compensate individuals accurately and entirely for any economic losses actually suffered. Instead, section 12 benefits are payments referrable to an injury from an accident, where a person who is connected with the work force suffers a substantial inability to perform the essential tasks of his or her occupation as a result of the accident.

Section 12 benefits are calculated based on data related to the injured person's earnings. However, they are not, strictly speaking, compensation for loss of earnings, since, for example, an unemployed person may be eligible for these benefits.

Therefore, I must differ from arbitrator Naylor who found, at p.18 of McCormick, that "The general intent and purpose of the provision of income benefits [i.e. sec.12 benefits] is to provide compensation for loss of income arising from an inability to earn because of the effects of an automobile accident."

I would reformulate that statement and hold that the general intent and purpose of providing section 12 income benefits is simply to compensate an individual normally connected to the workforce for the inability to earn -- that is, the inability to perform the essential tasks of his or her occupation or earnings -- regardless of any actual loss of income. Indeed, section 12 benefits may significantly overcompensate or under compensate an individual for any real economic loss suffered, depending on his or her particular circumstances, and the level of optional benefits purchased.

Accordingly, I must disagree with arbitrator Naylor's observation that a failure to deduct pre-existing payments for loss of income would violate the general intent and purpose of the legislation, as being contrary to the general policy or principle against "double compensation". Since I find that the intent and purpose of both sections 12 and 13 is to compensate individuals for their loss of function resulting from a particular motor vehicle accident, I conclude that only payments for loss of income arising from the same accident would amount to "double compensation". I find therefore, having regard to the intent and purpose of the legislative scheme, that only such payments are deductible under sections 12 and 13.

Order:

The Applicant's benefits payable under section 13 of the No-Fault Benefits Schedule shall not be reduced by any amount in respect of his income from Family Benefits or the CPP, since such payments received by the Applicant do not constitute "payments for loss of income" within the meaning of section 13(3)(a) of the No-Fault Benefits Schedule.
The Applicant is entitled to the expenses that he has incurred in respect of this arbitration hearing, in accordance with Schedule 1 of Regulation 275/90. In particular, the Applicant is entitled to be reimbursed for the expenses claimed in his written submission dated May 19, 1992.

June 16, 1992

Senior Arbitrator

Date

Michael Morin v. The Personal Insurance Company of Canada, 1992 ONICDRG 22

Case Summary