Neutral Citation: 1997 ONICDRG 180

OIC A-011605

ONTARIO INSURANCE COMMISSION

BETWEEN:

MAURICE POIRIER

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issue:

The Applicant, Maurice Poirier, was injured in a motor vehicle accident on March 12, 1992. He applied for and received statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 672.¹ Royal terminated weekly income benefits on March 20, 1992. The parties were unable to resolve their disputes through mediation, and Mr. Poirier applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is:

1. How should Mr. Poirier's pre-accident gross weekly income be calculated?

Result:

1. Mr. Poirier's pre-accident gross weekly income is to be calculated in accordance with the Director's Delegate's decision in Scavuzzo and Canada Home Assurance Company dated June 19, 1992.

Hearing:

The hearing was held on August 5, 1997, before me, David Leitch, Arbitrator, by telephone conference.

Present at the Hearing:

Mr. Poirier's Representative:

Steven A. White Barrister and Solicitor

Royal's Representative:

Howard Lightle Barrister and Solicitor

Witnesses:

None

Exhibit:

Exhibit 1

the report of Hrycko & Associates Inc., dated March 7, 1995

Findings:

Counsel agreed that the facts of this case were not in dispute and that the only issue before me was the interpretation to be given to section 12(7) of the Schedule with respect to the calculation of the Applicant's pre-accident gross weekly income. This calculation is essential to the determination of the Applicant's level of weekly income benefits under the Schedule. Section 12(7) of the Schedule reads as follows:

(7) The following rules apply to the calculation of gross weekly income:

1. A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232.

2. When a person becomes qualified to receive an income benefit under subparagraph iii of paragraph 1 of subsection (2), the person's gross weekly income shall be deemed to be the greatest of,

i. if the person was qualified under either subparagraph i or ii of paragraph 1 of subsection (2), his or her gross weekly income as determined under paragraph 1,

ii. the gross weekly income payable under the contract of employment,

iii. $232.

3. Business expenses which cease as a result of the accident shall be deducted from a person's income from self-employment before calculating his or her gross weekly income.

This section has been the subject of decisions by many Ontario Insurance Commission arbitrators and two Ontario Court (General Division) judges. There appear to be three schools of thought about how to calculate the "average" of the Applicant's pre-accident gross weekly income over 4 or 52 weeks. Briefly stated, under the Scavuzzo² approach, only the weeks during which income was earned are included in the averaging calculation; under the Vo³ approach, all 4 or 52 weeks are included in the averaging calculation, even if no income was earned in some of those weeks, under the Singh⁴ approach, income is averaged over the full 4 or 52 weeks only if any interruption in earnings over some of those weeks was a regular and expected part of the work cycle.

Since the calculation of the Applicant's pre-accident gross weekly income is made by dividing the amount earned by the number of weeks included, the greater the number of weeks included in the averaging calculation, the lower the resulting average. The Vo approach, therefore, produces a lower average than the Scavuzzo approach and hence, a lower level of weekly income benefits.

Counsel for the Insurer submits that the case-law, read as a whole, reflects a consensus in favour of the Vo approach. He argues that this sort of consensus can constitute binding precedent and cites, in support of that proposition, the following language from the Supreme Court of Canada's judgment in Tremblay v. Quebec (Commission des affaires sociales) (1992), 1992 CanLII 1135 (SCC), 3 Admin. L.R.(2d) 173 at 217, [1992] 1 S.C.R. 952 at 974:

Ordinarily, precedent is developed by the actual decision makers over a series of decisions. The tribunal hearing a new question may thus render a number of contradictory judgments before a consensus naturally emerges. This of course is a longer process; but there is no indication that the legislature intended it to be otherwise.

This passage had also been cited and relied upon by the arbitrator in the Vo decision.

I accept that a consensus has emerged in favour of the Vo approach but, for the following reasons, I do not accept that I am bound by that consensus.

First, I do not read this passage as authority for the proposition that a precedent created by consensus amongst arbitrators of equal rank has binding effect or, in legal terms, constitutes stare decisis. In an administrative law context, such a precedent must be carefully considered but, as stated by Robert Reid and Hillel David in their text, "Administrative Law and Practice:"⁵

The normal rule is that stare decisis is not applicable, and a tribunal can apply different criteria from time to time.

Second, the binding effect of any precedent developed by consensus amongst arbitrators of equal ranks must be reconsidered where, as here, the legislature creates a hierarchy of tribunals. Sections 282(1) and (5) of the Insurance Act provide a right of appeal from the decision of an arbitrator to the Director and permit the Director to confirm, vary or rescind the order appealed from or substitute his or her order for that of the arbitrator. In my opinion, the legislature could not have created this right of appeal without intending to make decisions of the Director binding on arbitrators, regardless of any prior consensus that may have developed amongst them. I reach this conclusion by reflecting upon the implications of a right of appeal which did not produce binding decisions.

The first implication would be the "longer process" inherent in the development of precedents through consensus. The existence of a right of appeal suggests a legislative intention to create a quicker process whereby Director's rulings immediately bind and govern subsequent decision-making by arbitrators.

A second implication would be that Director's decisions would only be binding on the actual parties involved in appeals to the Director and not on other parties or the same parties appearing before arbitrators in other matters, even when questions of law were involved. Arbitrators' refusals to be bound by Director's rulings would force Applicants or Insurers to appeal to the Director merely to obtain results in line with earlier Director's decisions.

Even after Directors' decisions were issued, they would still only be binding on the parties to the appeals in question and hence leave voids as to the proper interpretation of the Schedules. These voids would undoubtedly be filled through increased applications to the Divisional Court for judicial review with all the associated costs and delays.

I regard the creation of a right of appeal to the Director under the Insurance Act as a legislative attempt to avoid these problems. For it to work as intended, however, the decisions of the Director must be binding on the arbitrators of first instance. As stated by David Foulkes in his test, Administrative Law:⁶

Tribunals must of course follow relevant court decisions. But what about precedent within a particular hierarchy of tribunals? Take for example, the social security tribunals where the first decision is taken by the adjudication officer with appeal to the local tribunal and then to a Social Security Commissioner. The latter gives reasons, decisions are written, and selected decisions are reported. Obviously the Commissioner's decisions bind those below them, so it is necessary that their decisions should be known by those below them.

Likewise, I find that to fulfill the legislative intention to create an effective internal appeal system under the Insurance Act, Director's decisions must be and are binding on arbitrators. I note that at least one other arbitrator has also considered himself bound by a Director's decision.⁷

I observe that in deciding that he was not bound by the Scavuzzo decision, the arbitrator in the Vo case said:

In my opinion, the interpretation of section 12(7)1. cannot be regarded as settled. It has only been considered by one arbitrator and by a delegate of the Director.

The fact that the Director's decision in Scavuzzo was signed by a delegate is, in my opinion, without significance. I am still bound by that decision because section 6(3) of the Insurance Act allows the Director to delegate "any of his or her powers or duties," including the power the hear and determine appeals under section 283.

This conclusion disposes of the issue before me. Of the three approaches for calculating the Applicant's pre-accident gross weekly income, only the Scavuzzo approach has been approved on appeal to the Director. The Vo approach is under appeal to the Director but a decision has not yet been issued.

I should indicate that if I were not bound by the Scavuzzo approach, I would have followed the Singh approach. The arbitrator who developed that approach provided the following reasons:

I do not agree that the plain meaning of section 12(7) mandates the calculation set out in Vo in all cases. I agree with Senior Arbitrator Naylor [in the Scavuzzo decision] that subsection 12(7)1 is unclear and ambiguous. It would seem to apply relatively easily to a long-time employee who has had no interruptions in service in the year before the accident. However, it does not set out rules for determining the gross weekly income of casual workers, seasonal workers, or workers who have been laid off as a result of disability or economic conditions during the year before the accident. Nothing in subsection 12(7)l mandates any particular way of dealing with the vacation periods of self-employed workers.

In my view, the ambiguous language of subsection 12(7) must be given an interpretation consistent with the underlying legislative intent that weekly income benefits compensate the injured person for roughly 80 per cent of the income lost as a result of the accident. I do not accept that subsection 12(7) was drafted without regard to accuracy [in calculating the applicant's pre-accident income]. The Schedule is remedial legislation which should be given a broad and liberal interpretation. In my view, subsection 12(7) should be given the interpretation, in each case, which provides for the most accurate assessment of the applicant's pre-accident financial circumstances. It may not be possible to set out a formula for all cases.

Mr. Singh testified that he took a vacation in early 1991 in order to spend time with his parents who were visiting. I heard no evidence that he took any other vacation during the 52 weeks prior to the accident. A yearly vacation is an expected and regular part of the work cycle. It is accommodated in the case of employees by dividing their yearly income over the entire year, not just the weeks actually worked, in order to provide a continuous income stream over the year, including the vacation period. A self-employed person is responsible for making her or her own plans for continuing the income stream over the vacation period. In my view, Mr. Singh can be assumed to have planned for his vacation by putting aside some of his income in the 52 weeks prior to the accident to be averaged over the entire 52 weeks, not just the 47 weeks he actually worked.⁸

This interpretation of section 12(7) was criticized by Cameron J. in his judgment in the Youden case.⁹ While appearing to agree that section 12(7) is ambiguous, the judge wrote:

I cannot accept the suggestion that the interpretation of the Regulation varies with the circumstances. It must be interpreted uniformly, no matter where the sympathies or equities lie on the facts of a particular case. If this produces an unreasonable or unfair result, the legislature or the Lieutenant-Governor-in-Council should be asked to amend the Act or the Regulation.

I agree that under the Singh approach, the averaging calculation would vary with the circumstances of particular cases. This would not, however be, because the Singh approach permits the interpretation of section 12(7) to vary with the circumstances or that it cannot be uniformly applied. Rather, it would be because the Singh approach is more fact-sensitive than the other approaches and the facts change from case to case.

I also agree and find that section 12(7) is ambiguous. The existence of three approaches for its interpretation amply demonstrates that. The Singh approach recognizes this ambiguity but, if adopted, would permit the law to evolve through decisions made by arbitrators or judges in particular, probably recurring, fact situations. I see nothing improper in this state of affairs. The Legislature, of course, retains the right to amend the law to remove any ambiguity or to impose new rules for the calculation of applicants' pre-accident gross weekly incomes.

Order:

1. Mr. Poirier's pre-accident gross weekly income is to be calculated in accordance with the Director's Delegate's decision in Scavuzzo and Canada Home Assurance Company dated June 19, 1992.

I may be spoken to with respect to expenses if necessary.

September 30, 1997

David Leitch Arbitrator

Date

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule —Accidents On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2This approach was first articulated in the decision of McCormick and Economical Mutual Insurance Company, (October 2, 1991), A-000139, repeated in Scavuzzo and Canadian Home Assurance Company, (March 18, 1992, A-000626, (confirmed on appeal, June 19, 1992, P-000626) and followed in Richardson and Royal Insurance Company of Canada, (November 3, 1992), A-001141, Alleyne and Royal Insurance Company of Canada, (February 18, 1993), A-001107, and Kotsiakos and State Farm Mutual Automobile Insurance Company,(June 21, 1995), A-002354.
3. 3This approach was first articulated in the decision of Vo and Maplex General Insurance Company, (October 4, 1993), A-002777, repeated in Khanna and State Farm Mutual Automobile Insurance Company, (January 26, 1994), A-001665, and followed by arbitrators in Bush and Pilot Insurance Company (April 25, 1994), A-004687, Mouawad and Alpina Insurance Company (June 30, 1994), A-003226, Ahmed and Royal Insurance Company (October 13, 1994), A-004411, Furtado and York Fire & Casualty Insurance Company (June 22, 1995), A-008927, Wessels and CAA Insurance Company (Ontario)(June 14, 1995), A-013676, Veal and Ontario Insurance Commission (MVACF) (November 14, 1995), A-010539, Tiwana and Allstate Insurance Company (February 13, 1996), A-950155, Milewski and State Farm Mutual Automobile Insurance Company (June 6, 1995), A-01292, Lunn and State Farm Mutual Automobile Insurance Company (July 24, 1996), A96-000196, Mallet and Pilot Insurance Company (September 17, 1996), A95-000354, Thorning and Allstate Insurance Company (October 9, 1996), A-010617 and by judges in Descarie v. Personal Insurance Company (1995), 1995 CanLII 7051 (ON CTGD), 23 O.R. (3d) 457 and Youden v. Economical Insurance Company (1996), 299 O.R. (3d) 411.
4. 4This approach was first articulated in the decision of Singh and Wellington Insurance Company, (June 24, 1994), A-004139, followed in Ferrari and Royal Insurance Company of Canada, (September 8, 1994), A-007313, and challenged but not abandoned in Jensen and Gan Canada Insurance Company, (September 24, 1996), A95-000577.
5. 5Butterworths (Toronto), Second Edition (1978) at page 106.
6. 6Buttterworths (london, Dublin, Edinburgh), Seventh edition, 1990 at page 144.
7. 7Morgan and Allstate Insurance Company of Canada, (May 26, 1997), A96-000666
8. 8See footnote 4 and pages 25 and 26 of the Singh decision.
9. 9See footnote 3.