Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 206

Appeal P-002777

OFFICE OF THE DIRECTOR OF ARBITRATIONS

CHUONG VO

Appellant

and

MAPLEX GENERAL INSURANCE COMPANY

Respondent

and

INSURANCE BUREAU OF CANADA

Intervenor

Before:

Elisabeth Sachs

Counsel:

Michael Gillen (for Chuong Vo)

Brian Atherton (for Maplex General Insurance Company)

Lee Samis (for Insurance Bureau of Canada)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order dated October 4, 1993, is confirmed.

2. Mr. Vo is entitled to his reasonable appeal expenses, including his expenses in responding to the Application for Intervention, payable by Maplex General Insurance Company.

December 12, 1997

Elisabeth Sachs Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF APPEAL

Chuong Vo appeals from an arbitrator's decision determining how the amount of weekly income benefits payable to him by Maplex General Insurance Company ("Maplex") is calculated under section 12 of O. Reg. 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, (the Schedule). The arbitrator held that subparagraph 12(7)(1)(ii) of the Schedule requires averaging Mr. Vo's income over the full 52 weeks before the accident although Mr. Vo worked and earned income in only 33 of those 52 weeks.

Mr. Vo submits the arbitrator erred in his interpretation of the Schedule for two reasons. First, this issue was previously determined on appeal¹ and arbitrators are bound to follow decisions of the Director of Arbitrations or Director's Delegates (the stare decisis argument). Second, he submits that in any event, the formula in section 12 of the Schedule is to divide his income during the 52 weeks preceding the accident by the number of weeks he actually worked, thereby obtaining an average amount which more accurately reflects his pre-accident income (the interpretation argument). This approach, he argues, is what the Legislature intended through a Schedule which replaces accident victims' right to sue with a system to replace income they might otherwise have earned.

Maplex takes the opposite view, supporting the arbitrator's interpretation of how the weekly income benefit is calculated. Further, it submits the common law doctrine of stare decisis does not apply to statutory or administrative tribunals which are not required to follow their previous decisions on the same or similar issues.

II. PROCEEDINGS IN APPEAL

After the appeal was launched, the Insurance Bureau of Canada ("IBC") filed an Application for Intervention pursuant to subsection 283(8) of the Insurance Act, R.S.O. 1990, c. I-8, as amended, (the Act). It asked to intervene on the stare decisis issue, the proper method of calculating weekly income benefits from employment and the impact of various interpretations of subsection 12(7) of the Schedule on automobile insurance premium rates. Mr. Vo objected to the intervention unless it was confined only to the issue of premium rates, while Maplex generally supported it. Both parties and the IBC made oral submissions on the intervention application.

In my order of March 11, 1994, I allowed the IBC to intervene and make submissions on the sole issue of whether the doctrine of stare decisis is applicable to this tribunal.² Ultimately, the IBC filed a letter indicating its view, without supporting authority, that the doctrine does not apply.

During the course of the appeal, Maplex was placed in receivership. This resulted in a stay of all actions against it, including any arbitrations filed with the Commission and Mr. Vo's appeal. On December 5, 1995, Mr. Vo obtained an order from the Honourable Justice Farley of the Ontario Court (General Division) granting him leave to continue this appeal.

III. BACKGROUND

Mr. Vo was injured in an automobile accident on June 5, 1992. At the time, he was on "indefinite lay-off from employment with McDonnell Douglas and receiving regular Unemployment Insurance benefits ("UI", as they were then called). He applied to Maplex for weekly income benefits on the basis that he had worked the required period of time in subsection 12(3) of the Schedule to qualify for them.

Maplex initially refused to pay any benefits. It claimed that Mr. Vo was receiving UI benefits, thereby certifying he was ready and able to work and thus could not be substantially unable to do the essential tasks of his employment as an aircraft parts assembler. Mr. Vo then applied to have his regular UI benefits changed to sickness benefits in August 1992, retroactive to the date of the accident. His regular UI benefits stopped and eventually Mr. Vo was granted sickness benefits to September, 1992. As a result of discussions with Maplex, Mr. Vo also applied for benefits through Cigna Insurance, the disability insurance carrier for McDonnell Douglas, but was refused for reasons not relevant to the appeal.

During the mediation process Maplex agreed to pay $185.60 weekly under section 12 of the Schedule without admission that Mr. Vo was eligible for the benefit. Maplex finally terminated weekly benefit payments as of December 31, 1992.

After a two day hearing, the arbitrator found Mr. Vo entitled to weekly income benefits to November 4, 1992, but in an amount higher than Maplex had paid. He ordered the difference plus interest be paid to Mr. Vo.

Mr. Vo appeals that portion of the arbitrator's decision interpreting the calculation in subsection 12(7) of the Schedule. The arbitrator, holding he was not bound by the Scavuzzo appeal decision, determined the amount Mr. Vo was entitled to at $455.58 weekly:

Income of $29,613.21

x 80%

52 weeks

Mr. Vo claims the correct interpretation is that the benefit amount is $600 weekly :

Income of $29,613.21

x 80% (to the maximum)

33 weeks worked

The factual background outlined above is not in dispute. Mr. Vo and Maplex filed written submissions and made oral argument.

IV. ISSUES AND ANALYSIS

1. Application of the Doctrine of Stare Decisis

The doctrine of stare decisis, strictly speaking, is a judicial concept based on judge made law, and reflects the hierarchy of the courts. The issue in this case is the binding nature of Director's decisions on arbitrators, and whether appeal decisions represent precedents in interpretation that arbitrators are bound to follow, given the structure of the dispute resolution system set out in the Act.

(a) Mr. Vo's Position

Mr. Vo agrees that the doctrine of stare decisis itself does not apply to single level administrative tribunals or adjudicators with the same or co-ordinate jurisdiction. The difficulty with this decision, he submits, is that the arbitrator equates a Director's decision to that of an arbitrator. While that may be the case where the Director holds a rehearing, and thus acts in the capacity of a fact finder de novo, to say appeal decisions do not bind arbitrators ignores the structure of the appeal provisions of the Act. Similarly, he argues, arbitrators could not be free to ignore the decisions of the Divisional Court, to whom the Director can state a case under subsection 285(1) on questions of law.

In this scheme, Mr. Vo submits there is a 'trial' level and an 'appeal' level, not unlike the structure of summary conviction offences courts. The Director has broad rights in determining an appeal and may admit new evidence or rehear a case in exceptional circumstances.³ Further, the ability of the Director to permit interventions on an issue of law shows the determination on appeal is wider than interests of the parties alone, and decisions on such issues must bind the arbitrators. Mr. Vo argues the dispute resolution system has 'trappings' reminiscent of the courts (pleadings, rules of procedure, appeal). Although it is described as an alternative, nevertheless to ensure certainty for both consumers and the insurance industry, he says Director's decisions must be seen as definitive.

Mr. Vo says that arbitrators are not limited in their role by Director's decisions, but instead must be guided and held to interpretations set down in those decisions. Arbitrators remain impartial decision makers and adhere to the rules of natural justice. Where there are clear appeal pronouncements on interpretation of the Act and Schedule, these are to be applied. At worst, if Director's decisions were not binding, arbitrators could divide into different groups on a single issue, necessitating continual appeals because the outcome of a given case would depend on who was hearing it. The result would be chaotic, which the Legislature could not have intended.

(b) Maplex' Position

Maplex says stare decisis does not apply to administrative tribunals, relying on administrative law texts and several court cases, including statements of the Supreme Court of Canada.⁴ The general reasons cited are that tribunals usually exist in, or are created for, specialized fields and must reflect developments and changing circumstances in them. Such tribunals must remain open and flexible in their approach. While they may find their own earlier decisions persuasive, tribunals should not consider them as necessarily binding and immutable for all purposes. Further, a tribunal which has an appellate function should not "fetter itself" by general principles it has developed as an administrative tribunal.⁵ This concept, Maplex argues, applies equally to appellate branch decisions of a tribunal: specifically, Commission arbitrators' discretion to determine the merits of a claimant's case should not be encumbered by the Director's decisions. It submits that case specific adjudication of the Schedule and Act will, over time, result in a consensus of opinion which must be allowed to develop in the absence of rigid rules of interpretation. Absolute rules would deny not only the necessary flexibility required of arbitrators, but might dissuade legitimate claimants from accessing this adjudicative system.

Maplex takes the view that although there may be a lack of consistency and hence an absence of precedent if the doctrine does not apply, that will not result in the "administrative chaos" envisaged by Mr. Vo. It points to other bodies such as the Workers' Compensation Board which makes thousands of decisions a year, and relies on the statement of the Honourable Madame Justice L'Heureux-Dube of the Supreme Court of Canada that "a lack of unanimity is the price to pay for the decision making freedom and independence given to...tribunals."⁶ Essentially, Maplex states that a fixed and (perhaps) wrong rule cannot be allowed to perpetuate itself through precedent, thus frustrating the tribunal's ability to decide the merits of each case before it. Accordingly, the arbitrator was entitled to determine the merits of Mr. Vo's case and then determine the appropriateness of the interpretive "rule" laid down in Scavuzzo. In so doing, he was free to distinguish the case, or refuse to follow the rule on the basis that it was not fixed or inflexible and was confined to the particular merits of that case.

(c) Analysis

The issue before the arbitrator was narrow: how much should Mr. Vo's benefits be? That required, as a matter of law, the proper interpretation of section 12 of the Schedule. There is no question that this exact issue was also before the Director's Delegate in Scavuzzo. While the employment situation of Mr. Vo and Mr. Scavuzzo differed as the former was unemployed and the latter employed at the time of the accident, does that fact permit an arbitrator to say the legal interpretation placed on the section by the appellate unit of this adjudicative system was not binding on him? I do not believe it does.

The Legislature created a specialized system for the adjudication of statutory accident benefit disputes as an alternative to the courts. The Commission enjoys a concurrent jurisdiction with the courts by virtue of subsection 281(1) of the Act. Arbitrators are independent of each other. They can agree or disagree with each other, as they are adjudicators of equal rank on interpretation of the legislation. While consistency among them is desirable, it is not an absolute requirement of the Commission, either in its guidelines, policies or through its procedures, as may appear in other tribunals.⁷

Built into the statutory framework, however, is an appeal process. The applicable section of the Act at the time of this proceeding stated:

283.--(1) A party to an arbitration may appeal the order of the arbitrator to the Director.

Notice of appeal

(2) A notice of appeal shall be in writing and shall be delivered to the Commission within thirty days after the date of the arbitrator's order and the appellant shall serve the notice on the respondent.

Extension of time

(3) The Director may extend the time for requesting an appeal, either before or after the thirty days, if the Director is satisfied that there are apparent grounds for granting relief to the person and that there are reasonable grounds for applying for the extension, and the Director may give such directions as he or she considers proper consequent upon the extension.

Nature of hearing

(4) The Director may determine the appeal on the record or by way of a rehearing of all the issues before the arbitrator or partly on the record and partly by way of rehearing as the Director in his or her opinion may decide.

Power of the Director

(5) Upon hearing an appeal, the Director may confirm, vary or rescind the order appealed from or substitute his or her order for that of the arbitrator.

The appeal process is the last one which can be invoked within the Commission's jurisdiction. The only further step available is an application for judicial review to the courts. Therefore, the Director's decisions are final and conclusive for all purposes, with no right of appeal as provided in subsection 20(2) of the Act.

While the binding nature of appellate decisions is a concept rooted in the court system, in enacting the dispute resolution provisions of the statutory accident benefits scheme, the Legislature established an alternative to the use of the courts. The Director may rehear a case, which implies a full adjudication with the calling of evidence under oath. Between the parties, the appeal decision is determinative of the disputed issues, as by subsection 283(4), the Director's powers include the options to confirm, vary or rescind the arbitration order or substitute his or her own decision for it.

I do not believe that the Legislature intended appeal decisions interpreting statutory or regulatory provisions to be confined to determining only the rights of the parties to the appeal, in effect giving a second opinion which would have no impact on other arbitration cases with the same interpretive dispute. If that were so, the process merely duplicates itself, and the goal of expeditious resolution of disputes is compromised. It would be anomalous if the first instance branch of a tribunal were to develop and follow one statutory interpretation, and the appellate branch, another.⁸ There would be no need for the finality provisions found in section 20 if such were the case. The alternative dispute resolution scheme contains diverse elements of both tribunal and court systems. It is in many ways unique, from mandatory mediation through to the variation/revocation powers for both arbitration and appeal decisions. Combining these in one tribunal was intended to create a comprehensive system of resolution while ensuring stability, predictability, and consistency.

(d) Conclusion

Binding precedent on the interpretation of the Schedule and Act does exist in the administrative tribunal created by the Legislature as alternative adjudicative system for the resolution of disputes over statutory accident benefits. Decisions of the Director, to the extent they cannot be distinguished⁹ are binding on the arbitrators. Flexibility and the application of precedent are not mutually exclusive. To hold otherwise would deprive the appeal process of its logical purpose.

An appeal is not a right of "reconsideration" as generally understood in administrative law, nor is it a right to a hearing de novo. The Director may undertake new hearings, but this involves primarily questions of fact, not law. Where a Director's decision formulates a rule on the interpretation of the statutory provisions under which claims for benefits are made, that interpretation is binding on the first instance adjudicators. If the interpretation is to be properly challenged, an application for judicial review is required.

I agree with Mr. Vo's submission that the Legislature intended there to be certainty on issues of law going beyond the specific dispute of the parties. That is one of the reasons to give the Director the power to ask for submissions on such issues from intervenors whose interests must have broader implications than those of the parties.

Accordingly, if only the concept of the binding nature of appeal decisions were at issue here, Mr. Vo would succeed. That is not the end of the inquiry, however.

Just as arbitrators are not bound by each other's decisions, I am not bound by my own or a Director's Delegate's decision on the same issue. The interpretation and application of the formula in section 12 of the Schedule remains a live issue at the appeal level when submitted for decision. Given my conclusion that Director's decisions are binding on arbitrators, it is patent that departure at the appeal level from a previous interpretation of a statutory or regulatory provision should only occur in clear and cogent circumstances.

2. INTERPRETATION OF s. 12 OF THE SCHEDULE

The relevant portions of the section read:

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

1. The 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.

In dispute is how to apply the concept of "average" to the time period in subparagraph 12(7)(1)(ii) and arrive at the weekly benefit amount. Does "average" mean the average of what was earned during the time Mr. Vo was actually employed in the 52 weeks before the accident, or does it mean the average of the total amount he earned in those 52 weeks, whether employed or not?

(a) Mr. Vo's Position

Mr. Vo argues that the proper approach to the section, which he maintains is ambiguous as found in Scavuzzo, is an emphasis on the words "from employment". He submits there is no income "from employment" during periods of unemployment, consequently, those periods should not be counted for the purpose of obtaining an average of gross income "from employment". To do as the arbitrator did here, Mr. Vo says the word "over" must be read into the section. Reading in the word, however, does not adequately take into account the income Mr. Vo lost as a result of the accident. He submits he was actively seeking employment during the lay-off and but for the accident and his subsequent disability, he could have accepted employment sooner. Using the arbitrator's method and averaging income over the full 52 weeks before the accident devalued his true income situation.

(b) Maplex' Position

Maplex takes the view that the section has a 'plain and ordinary' meaning: the one arbitrator gave it. There are two base periods of time, not periods of employment only, and a basic monetary amount a claimant can look to in establishing the amount of the benefit. Whichever is most favourable is the amount payable by the insurer. It submits Scavuzzo and cases following it are wrong, as they apply a tort damage concept (restoring the person to his pre-accident state) to a statutory regime. Instead, it argues the better view is that the Schedule provides the "exchange" of a fast, certain and adequate benefit payment, subject to specific terms and restrictions. As stated by the arbitrator, this may work to a claimant's advantage or disadvantage. In Mr. Vo's case, Maplex notes it was a true benefit as he recovered more as a result of the accident than by continuing to collect UI benefits with no prospects of quickly obtainable employment.

(c) Analysis

Since this case was first arbitrated and the appeal filed, numerous arbitrations and two court cases¹⁰ have considered the interpretation of the section. It is fair to say that generally Maplex' argument is accepted in the majority of decisions, but for different reasons. A refinement in the interpretation, favouring an individualized analysis of the circumstances of a claimant's employment history has also been considered, but largely abandoned.¹¹

As these approaches show, there is little unanimity on the section's clarity. That three different interpretations of the section have commended themselves to adjudicators points to an inherent ambiguity. I also cannot find the section has a clear and obvious meaning on its face. As well, it is my view that the Schedule itself is not so elastic that a claimant's particular circumstances will mandate how a particular section is to be applied where no overt discretion to allow an adjudicator to do so is built in.

The Schedule was designed to promptly provide claimants with benefits to which they are found to be entitled, regardless of fault in an accident. The benefits are not subject to the same customized determination as are damages in the tort regime. The amount of income benefits is based on a calculation imposed by subsection 12(7) if the person is employed or, by subsection 12(3), is qualified to receive a benefit because of a temporal connection to the workforce. Similarly, if found to be not employed or so qualified, the person's benefit is a constant amount under section 13, whether or not this reflects his or her actual or potential loss. To that extent, there is an arbitrary element in how the statutory accident benefits scheme operates in any given case.¹²

The section refers to income "for the" 52 weeks. It does not qualify the time period in any way. It is an earnings based picture: an individual's circumstances, employed or not at the time of the accident (or as here on lay-off), are subsumed by the intent to provide compensation in the future on a reasonable historical perspective.

The argument that it is only the "income from employment" in those weeks during which a claimant is engaged in employment are averaged, requires a reading in of a limiting factor which I do not accept: namely, the further subdivision of the time period into categories of employment and unemployment. When coupled with the qualifying subsection 12(3) and the provisions of section 13, it is my view that the objects of the Schedule are best met, and the wording of the section given its most obvious meaning, when the gross weekly income of the period is divided by 4 or 52 weeks, as may be the case.

As a result, the formula applied by the arbitrator in this case to determine the amount of Mr. Vo's weekly income benefit is correct, and the appeal of the arbitrator's interpretation of subsection 12(7) of the Schedule is dismissed.

V. EXPENSES

The results of this appeal are mixed. Mr. Vo was successful in his opposition to the intervenor's and Maplex' position that stare decisis does not apply in the dispute resolution scheme under the Act. However, the end result is that the arbitrator's decision is upheld on the formula used to calculate the quantum of the weekly benefit. Both issues were novel and the binding nature of appeal decisions has not been the subject of previous decisions.

There is no statutory authority to order the intervenor to pay expenses for the time or costs of responding to the Application for Intervention. Mr. Vo is entitled to his expenses, including those incurred in the intervention proceeding, payable by Maplex.

December 12, 1997

Elisabeth Sachs Director of Arbitrations

Date

Footnotes

1. 1Scavuzzo and Canadian Home Assurance Company, (June 19, 1992, OIC P-000626).
2. 2Vo and Maplex General Insurance Company, (Order, March 11, 1994, OIC P-002777).
3. 3This was the approach taken in Calogero and The Cooperators, (February 13, 1992, OIC P-000251) and consistently applied in subsequent appeal cases.
4. 4Blake, S. Administrative Law in Canada, Butterworth Canada Limited, (1992); Reid, R. and David, H. Administrative Law and Practice, Butterworths (Toronto) 2nd ed. (1978); Evans, J.M. et. al., Administrative Law, Cases, Text and Materials, Emond Montgomery Publications Limited (Toronto, 1989); United Steel Workers of America, Local 14097 v. Franks (1990), 1990 CanLII 6666 (ON CTGD), 75 O.R. (2d) 382 (Div. Crt.) At 387; Re Man. Food & Commercial Workers Union and Canada Safeway Ltd. (1981), 1981 CanLII 200 (SCC), 123 D.L.R. (3d) 512 (S.C.C.).
5. 5Re Hopedale Developments Ltd and Town of Oakville, 1964 CanLII 196 (ON CA), 47 D.L.R. (2d) 482 (Ont. C.A.) at 487, determining the jurisdiction of the Ontario Municipal Board on appeal from the decision of a municipal council. It is noteworthy that the court held the Board was required by statute to exercise its own judgment on the merits of any application and could not by the use of "policies" restrict its discretion in so doing.
6. 6Domtar Inc. v. Quebec (CALP), 1993 CanLII 106 (SCC), [1993]2 S.C.R. 756 at 800. This case dealt with the standard of review to be applied by a court judicially reviewing a decision of an administrative tribunal, where there appeared to be conflicting interpretations of the same legislative provisions by two tribunals, each operating within their own jurisdiction. The Court confined itself to the effect of an intervention by a court of law to resolve a perceived conflict, and did not deal with an appellate structure within a tribunal itself.
7. 7As an example, the tribunal whose decision-making actions were under review in the Supreme Court of Canada case Tremblay v. Quebec(Commission des Affaires Sociales), (1992) 1992 CanLII 1135 (SCC), 90 D.L.R. (4th) 609, at pg. 625.
8. 8In Tremblay, the Court notes that there was no sign that the Legislature did not intend this longer and more cumbersome process in which conflicting judgements may coexist until consensus emerges. However, the court was dealing with a tribunal of first instance with no appellate function in it. The OIC structure, on the other hand, contains a fact finding and interpretive body with a subsequent appeal that is not by its nature fact finding. Further, the 'mischief' concerning the Court was the apparent lack of independence, or appearance of bias in the consultative process being followed by the Commission des Affaires Sociales.
9. 9For example, cases may be distinguishable because of their factual basis or a new interpretive argument not previously made or change in the environment in which the Act or Schedule operates.
10. 10Descarie v. Personal Insurance Company of Canada, (1995) 1995 CanLII 7051 (ON CTGD), 23 O.R. (3d) 457 (Ont. Gen. Div.); Youden v. Economical Insurance Company, (1996) 1996 CanLII 8010 (ON CTGD), 29 O.R. (3d) 411 (Ont. Gen. Div.).
11. 11Rajbir Singh and Wellington Insurance Company, (June 24, 1994, OIC A-004139); Peter Kotsiakos and State Farm Mutual Automobile Insurance Company, (June 21, 1995, OIC A-002354)( under appeal).
12. 12In Youden (supra, ftnte 8) Cameron, J. comments at page 414 that the Regulation, in replacing lost income without the necessity or proving fault, leads to "qualifications (that) are necessarily arbitrary" but it is to be interpreted "broadly and liberally". The intended result is that this interpretive approach to admittedly remedial legislation will counter balance the effect of any arbitrariness.