Neutral Citation: 1997 ONICDRG 50

OIC A-954390

ONTARIO INSURANCE COMMISSION

BETWEEN:

DONALD WINDSOR

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Donald Windsor, was injured in a motor vehicle accident on June 29, 1993. He applied for but never received various statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under Ontario Regulation 672.¹ Zurich alleges that Mr. Windsor has applied for arbitration out of time. The parties were unable to resolve their disputes through mediation and Mr. Windsor applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Windsor eligible to claim weekly benefits pursuant to section 12 or section 13 of the Schedule?

2. Is Mr. Windsor barred from proceeding with this arbitration proceeding pursuant to section 26(2) of the Schedule?

Mr. Windsor also claims his expenses incurred in the hearing.

Result:

1. Mr. Windsor is eligible to claim weekly benefits pursuant to section 13 of the Schedule.

2. Mr. Windsor is not barred from proceeding with this arbitration proceeding pursuant to section 26(2) of the Schedule.

3. Mr. Windsor is entitled to his expenses incurred in respect of the arbitration only with respect to one half of the hearing day.

Hearing:

The hearing was held in Kitchener, Ontario, on October 28, 1996, before me, David Evans, Arbitrator.

Present at the Hearing:

Applicant:

Donald Windsor

Mr. Windsor's Representative:

James E. Pitche Barrister and Solicitor r

Zurich's Representative:

William J. McCorriston Barrister and Solicitor

Zurich's Officer:

Jennifer Wilde

Court Reporter:

Betty MacDonald

Witnesses:

Donald Windsor

Carrie Conlon

Exhibits:

Exhibit 1

Document Brief

Exhibit 2

Record of Employment of Donald Windsor dated November 26, 1992

Exhibit 3

Letter from Employment and Immigration Canada dated February 4, 1993

Exhibit 4

Letter from the Workers' Compensation Board dated October 22, 1996

Exhibit 5

Letter from Zurich Canada to Gary Windsor dated July 14, 1995

Exhibit 6

Letter from Gary Windsor to Zurich Canada dated June 28, 1995

Exhibit 7

Copy of a cheque dated June 22, 1995, to the Minister of Finance

Exhibit 8

Letter from Gary Windsor to Zurich Canada dated October 5, 1995

Evidence and Findings:

There are two issues in this preliminary hearing: whether Mr. Windsor is entitled to claim under section 12 of the Schedule, and whether his claim for benefits is barred by section 26(2) of the Schedule.

Mr. Windsor could claim section 12 benefits if he was working at the time of the accident or had worked for any 180 days in the 12-month period before the accident.

Zurich denies that Mr. Windsor meets these criteria, and alleges that he can only claim the lower benefit under section 13 (benefit if no income). Zurich further alleges that in any event Mr. Windsor commenced this proceeding out of time.

Section 12 or section 13:

Background

For the most part of 1992 Mr. Windsor had worked for Labatt's Breweries in Waterloo. The plant closed, and his Record of Employment shows the last day worked as November 13, 1992.

Mr. Windsor testified that he was not properly terminated, in that he had not signed the release the company asked employees to sign. He also commenced a human rights complaint against Labatt's for not rehiring him to work at other plants.

Carrie Conlon was the assistant manager of Human Resources for Labatt's at the time of the plant closure. She testified that she was involved in the plant closure shortly after its announcement in May 1992. She described various details of the termination provisions worked out with the union, such as the severance pay. Because of the long notice period, the severance pay was not in lieu of notice but rather was provided on a contractual basis after the union negotiations. The severance was paid regardless of whether the former employee started a different job at any time after the plant closed.

Ms. Conlon interviewed Mr. Windsor for some positions at other plants, but determined that he was not suitable for them. As to the release, she testified that whether it was signed or not, it had no effect on whether the employee was actually terminated.

Mr. Windsor testified that he applied for but did not receive unemployment insurance. Employment and Immigration Canada wrote to him on February 4, 1993, indicating that Mr. Windsor had received some $26,000 in vacation and sick pay and a lump sum severance. The letter informed Mr. Windsor that these funds were deemed to be earnings allocated over the period from November 16, 1992, to June 18, 1993, and noted that eligibility for unemployment insurance benefits depended upon an interruption of earnings:

An interruption of earnings happens when there is or will be a period of seven or more consecutive days when an employee performs no work and gets no earnings from an employer.

Accordingly, since Mr. Windsor was still deemed to be receiving earnings, he had not yet had an interruption of earnings and was not entitled to receive unemployment benefits until after June 18, 1993.

Mr. Windsor testified that he never did apply for unemployment insurance again. Instead, from shortly after the plant closure, he was involved in a workers' compensation vocational rehabilitation program. Mr. Windsor had been involved in a work-related accident several years prior to the plant closure. He has been receiving a permanent lifetime monthly disability pension retroactive to 1986, which at the time of the hearing amounted to $229. He received a further temporary monthly disability pension of approximately $2,200 from January 6, 1993, while following a vocational rehabilitation program. He testified that the supplement was to be paid to the completion of his education. No final date for its completion had yet been agreed upon. Mr. Windsor was still following the program when he was injured in the motor vehicle accident on June 29, 1993.

Conclusion

Section 12 of the Schedule sets out benefits a person may receive under subsection 12(1) if several criteria are met, including these in subsection 12(2):

1. He or she must have been at the time of the accident,

I. employed or self-employed,

ii. on a temporary lay-off, or

iii. entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing.

Subsection 12(3) provides another criterion of eligibility, namely that a person who was unemployed and who was not self-employed at the time of the accident is qualified to receive this weekly benefit if he or she was employed or self-employed for any 180 days in the twelve-month period before the accident and meets the disability test.

Clearly, Mr. Windsor had worked at Labatt's for less than 180 days in the 12 months before the accident.

Mr. Windsor nonetheless argues that he is entitled to section 12 benefits on the basis that he was employed at the time of the accident — if his vocational rehabilitation can be deemed to be a type of employment while he was receiving disability payments — or else, on the basis that his severance and holiday pay or his allegedly improper termination can be deemed to have extended his period of employment, with the result that he can be deemed to have been employed for more than 180 days in the relevant 12-month period.

Dealing first with the question of the workers' compensation payments, several earlier decisions have held that neither permanent partial disability pensions nor temporary supplements paid during training constitute income from employment, and in situations similar to this one, have held that the applicant was entitled only to section 13 benefits and not to those of section 12.² I see no reason to deviate from these decisions. Accordingly, I find that Mr. Windsor was not employed on the date of the accident, and his claim pursuant to subsection 12(2) fails.

Dealing secondly with the extension of employment, Mr. Windsor argues that he was not properly terminated and that his severance package and vacation pay in effect extended his employment.

Ms. Conlon's evidence was clear: Mr. Windsor's job was terminated. I cannot see how any claim against Labatt's for possibly improper termination could change his status at the time of the accident. I find that Mr. Windsor's employment ended when the plant closed, and that any issues with Labatt's regarding that termination are irrelevant to the determination of his unemployed status.

As for the severance package, Mr. Windsor argued that as the Government of Canada, as represented by Employment and Immigration, had in effect treated him as employed — since it had treated the severance as earnings over several months during the post-layoff period — so should the Ontario Insurance Commission. I note that the test as set out in the letter from Employment and Immigration does not refer to "employment," but only to an "interruption of earnings" as defined in the letter. That is a different test. I do not find that test relevant to the issue before me.

Furthermore, Mr. Windsor's position has been refuted in earlier arbitration decisions. In Branden K. Hui and Security National Insurance Company,³ Senior Arbitrator Naylor (as she then was) held that a severance package was not deductible as post-accident income from employment. In Wessels and CAA Insurance Company (Ontario),⁴ Arbitrator Palmer applied the converse, holding that a severance package could not be included as pre-accident income from employment for the purpose of determining the size of the benefit. In short, the severance package is not tied to employment and cannot be deemed to extend the term of employment. Its very name suggests the answer to this issue: you do not receive a severance package unless you have lost your job. I find that the severance package did not extend Mr. Windsor's employment.

Mr. Windsor also argued that his vacation pay possibly extended his period of employment. To paraphrase Arbitrator Palmer in Wessels, the vacation pay accrued over the period that Mr. Windsor worked. As Mr. Windsor stopped working on November 13, 1992, the vacation pay related to the period up to that date and not to any possible deemed extension of his employment beyond that date.

Therefore, I find that Mr. Windsor had worked less than 180 days in the 12 months preceding the accident and that his claim for section 12 benefits pursuant to the criteria set out in subsection 12(3) fails as well.

I find that Mr. Windsor is eligible to claim weekly benefits pursuant to section 13 of the Schedule.

Was the Application for Arbitration Out of Time?

Background

Mr. Windsor testified that shortly after the June 29, 1993, accident, he made a claim for benefits from his Insurer. (At the time it was called Alpina Insurance Company, but for the purposes of this decision I will continue to refer to Mr. Windsor's Insurer as Zurich.)

The documentary evidence on file appears to show that Zurich continually tried to obtain information from Mr. Windsor in order to assess his claim.

The Document Brief contains a letter dated November 5, 1995, from a Ms. Pansy Halls addressed to Mr. Windsor at 231 Grand River Boulevard in Kitchener.

Mr. Windsor testified that this address was correct, but denied ever receiving the letter.

In the letter, after discussing the issue of a medical assessment, Ms. Hall writes as follows:

The Automobile Policy indicates that weekly benefits are not overdue unless we receive the completed application for No-Fault Benefits. As there is no mention in the Auto Policy of a faxed application, we do require the original application and the original medical for the file.

...We have supplied the Accident Benefits package to you and have not received the originals back, including the Medical Release so that we may contact your doctor about your injuries and the rehabilitation process.

We have provided the necessary documentation to you and we can give no consideration to your claim until the above issues have been addressed.

The next item in the brief is an Assessment of Claim by Insurer dated November 16, 1993, from

Ms. Halls.

Mr. Windsor denied ever receiving this assessment, although he did state that it stirred bad memories of his conversations with the insurance agent: "I say I have not received this document."

Under the heading Weekly Income Benefits on page 1, none of the boxes labelled "Applicable," "Claim Accepted in Entirety," "Portion of Claim Denied," or "Entire Claim Denied" are checked. Ms. Halls then writes as follows:

1. We have not yet received originals of application. 2) Claimant is in receipt of Worker's Compensation Benefits which may be deductible under Section 2.25 (I). 3) Doctor has not clarified whether claimant "suffers substantial inability to perform the essential tasks which he would normally engage in, Section 2.29. Nature of "essential tasks unclear". 4) To the best of our knowledge, claimant no longer suffers substantial inability to perform essential tasks in respect to neck and back injury; updated medical information requested to establish ongoing disability. 5) Claimant refused to attend examination requested by insurer Section 2.55 on Nov.9/93. No medical information available to support claimants [sic] reasons to refuse to attend.

Ms. Halls wrote again on January 18, 1994, reiterating that most of the items set out in the Assessment I have quoted remained unanswered or not completed (in particular, she noted that the Insurer had not yet received an original application for benefits). She did add that, since Mr. Windsor had attended a medical examination since the assessment of claim was sent, his claim was no longer being denied on that basis.

Regarding this letter, Mr. Windsor stated: "I don't recall this letter per se."

Two further assessments followed, in which Ms. Halls denied a claim for Kitchener Transit bus passes and accepted a claim for some massage receipts. Mr. Windsor did not deny that he had received these assessments.

The next item in the brief is an Application for Appointment of a Mediator signed by Ms. Halls — not by Mr. Windsor — on May 11, 1994. Ms. Halls wrote that the Insurer disputed Mr. Windsor's entitlement to benefits on the grounds that the information regarding the workers' compensation had not yet been provided, that Mr. Windsor had not supplied a release to obtain medical information, nor had he cooperated in determining his essential tasks. The Report of Mediator dated September 20, 1994, notes that these issues remained unresolved.

Mr. Windsor then took his own steps to bring the matter forward at the end of June 1995, two years after the accident. It appears he applied for mediation and arbitration at the same time.

The application for arbitration was not originally accepted by the Ontario Insurance Commission. The Brief contains a letter dated July 13, 1995, advising that the Commission needed an original application with signature and a $100 filing fee.

On July 14, 1995, Gloria Morris of Zurich wrote to Mr. Windsor as follows:

We have reviewed your file and note that we have not received a properly completed Application for Accident Benefits.

As you are aware and have indicated to us the limitation period for asserting your claim has now expired and as such you are barred from presenting a claim.

Zurich initiated a mediation in order to obtain further information with which to assess your claim and to date you have not provided the completed Application nor the requested information.

We have made repeated requests for you to do so. Therefore, we will be unable to consider your claim.

Mr. Windsor testified that he attempted several other times to send in his application for arbitration.

In the interim, there was a mediation. The mediator's report is dated September 21, 1995. Under "Issues Resolved," Mr. Windsor was to provide Zurich with some information it had been seeking, such as the last date of his employment.

In response to this agreement, Mr. Windsor testified that he sent blacked-out copies of various documents to Zurich. The Record of Employment he sent has almost all dollar figures blacked out except for the last date of employment. The letter from Employment and Immigration Canada he sent has the information regarding the amounts of his severance benefits and the dates of the allocation of the benefits and several other items blacked out.

Mr. Windsor testified that after the mediation he issued another application for arbitration.

By letter dated February 23, 1996, to counsel for Zurich, Jim Malcolm, Executive Coordinator/Registrar of the Dispute Resolution Group of the Commission, set out the history of these attempts at filing an application for arbitration:

This application for Appointment of an Arbitrator was first faxed to the Commission on June 29, 1995. Several technical deficiencies were brought to the applicant's attention. A second faxed copy was received on November 2, 1995. Again, the claimant was requested to forward an original signed application and on December 27, 1995 the Commission received that copy which was forwarded to your client.

It should be noted that production of items continued to be an issue until immediately before this hearing. On October 17, 1996, at the resumption of the pre-hearing, it was clear that Mr. Windsor has still not produced a clean copy of the Record of Employment, nor his income tax returns, and that he continued to resist allowing counsel access to the employer's file.

Conclusion

The time limits for a proceeding are set out in section 26 of the Schedule. Pursuant to subsection 26(1), Mr. Windsor had to have commenced his proceeding within two years from the Insurer's refusal to pay the amount claimed in the application for statutory accident benefits. Subsection 26(2) (an amendment to the Schedule added in 1993) may provide an extension of time in certain circumstances. It provides that, despite subsection (1), an arbitration or court proceeding may be commenced "...within 90 days after the mediator reports to the parties."

Zurich takes the position that Mr. Windsor received notice of the refusal of benefits in the Assessment of Claim dated November 16, 1993, and that normally, the application for appointment of an arbitrator would have had to be issued by November 16, 1995. However, the report of mediator, by virtue of subsection 26(2), extended the limitation period by 90 days after the mediator reported to the parties. The mediator's report is dated September 21, 1995. I calculate 90 days from September 21, 1995, as being December 20, 1995. Since the perfected application was not received by the Commission until December 27, 1995, Zurich submits that the application was brought out of time.

I take notice that the Commission was closed from Saturday, December 22, 1995, until after Boxing Day on December 26.

Mr. Windsor does not accept December 27, 1995, as the date he applied for arbitration. Furthermore, he does not accept that there ever was a refusal of benefits or that he ever received proper notice of such a refusal, and suggests that Zurich misled him after the alleged refusal.

With respect to the date of application, Mr. Windsor argues that his application was substantially completed in time and suggests that the Commission may have exceeded its jurisdiction in not accepting his application until the end of December 1995.

I am not persuaded by these arguments. Mr. Windsor was in communication with members of the Commission from June 1995. I find he was advised as to the proper steps to take to complete his application. Those steps were not completed until December 27, 1995. I find that the relevant date of commencement of this proceeding for the purposes of section 26 is December 27, 1995.

With respect to the refusal, the leading case on this limitation period is Veldhuizen and Coseco Insurance Company⁵ wherein Arbitrator Bayefsky summarized the governing principles (with which I agree) as follows:

(1) An arbitrator does not have a general discretion to extend the time limits prescribed in the Act and Schedule.

(2) To determine if the limitation period applies in a particular case, it must first be determined whether, and when, there was a refusal to pay benefits, and then whether the insurer is estopped from relying on the limitation period that runs from the date of the refusal.

(3) The insurer must show that the refusal was clear and unequivocal, and was communicated to the applicant in writing, with supporting reasons.

(4) An insurer may be estopped from relying on the limitation period if the applicant relied to his or her detriment on the insurer's conduct or if the Insurer unreasonably delayed the applicant in processing the claim.

(5) The limitation period runs continuously from the time of the refusal unless the applicant has been misled or deceived by the insurer in subsequent dealings on the claim or the applicant has returned to work or school within the meaning of sections 16 and 26 of the Schedule.

[Footnotes deleted]

Mr. Windsor submits that the letter Zurich sent to him on July 15, 1995, advising him that his claim was out of time, was misleading or deceiving. Therefore, Zurich's behaviour interrupted the running of the limitation period. I do not agree. As I read that letter, quoted above, Zurich was referring to the limitation period for providing notice and for making an application for benefits set out in section 22 of the Schedule. The issue of the sufficiency of the application itself is not before me, and I find that nothing turns on that letter.

Mr. Windsor testified that he never received the assessment, and submits that it is up to the Insurer to prove that he received the assessment, in that it cannot rely upon the "mailbox rule." He relied upon the appeal decision in Wiggan and Simcoe and Erie General Insurance Company⁶ on this latter point.

On the contrary, Director Sachs of the Commission, stated: "I am not saying an insurer must prove actual receipt of a notice, but a claimant must have knowledge of the refusal. Nor do I find the mailbox rule is inapplicable in proceedings concerning contracts with statutory conditions." She found that, in the facts of that particular case, knowledge of the refusal was incapable of proof, and no date could be placed upon the communication of the refusal.

It should be pointed out that in Wiggan, the applicant did not testify. Mr. Windsor did, and I find that he was not a credible witness. Although he apparently had no problem with his mail at any other time, he denied receiving not only the assessment dated November 16, 1995, but also the letters dated November 5, 1993, and January 18, 1994. While denying he received the assessment, he testified that seeing it "stirred bad memories of conversations with the insurance agent." This suggests to me that at the relevant period communications were ongoing with Ms. Halls. I also note that in the assessment the claim is denied for, among other things, Mr. Windsor's refusal to attend a medical examination. By the time of the January letter, Mr. Windsor had attended at the doctor's; he testified he did remember the doctor Zurich had appointed to see him. I also note that Mr. Windsor admitted that he had attended the mediation in 1995 with a box containing his documentation, but he failed to produce the box or the documentation at the hearing. I draw a negative inference from this failure (a failure which was consistent with his actions in the past of refusing to produce documentation or producing it late) that the Notice and the letters were in the box. I conclude that Mr. Windsor did indeed receive the Notice of Assessment.

The date of its receipt is more difficult to ascertain. The relevant time period ran from November 16 through to December 20, 1993. I find it more likely than not that the assessment was received prior to December 20, 1993.

Mr. Windsor submitted that the Notice of Assessment failed the tests set out in Veldhuizen, in that it was not clear and unequivocal. On this point, I am inclined to agree with Mr. Windsor. Neither of the boxes labelled "Portion of Claim Denied" nor "Entire Claim Denied" are ticked. Reading the comments under the Weekly Income Benefits heading as a whole (reproduced above), it appears that the Insurer was seeking first and foremost a completed application and secondly, supporting information to establish the claim and the amount of the benefit. As a whole, I do not find the Assessment contains a clear and unequivocal refusal to pay which is necessary to establish the beginning of the limitation period.

I make this finding reluctantly, as Zurich tried to obtain relevant information from Mr. Windsor, and he, in turn, continually blocked Zurich's efforts. Zurich went so far as to start its own mediation in an effort to obtain the information. When Mr. Windsor did provide documents, he blacked out significant portions of them.

I find that Mr. Windsor is not barred from proceeding with this arbitration proceeding pursuant to section 26(2) of the Schedule?

Costs:

Counsel for Zurich submitted that Mr. Windsor should not be entitled to his costs for that portion of the hearing related to the issue of whether benefits may be payable under section 12 or section 13, as the principles have been well established and Mr. Windsor had no reasonable possibility of being successful on that point. I agree. I allow Mr. Windsor his expenses for a half day of the hearing.

Order:

1. Mr. Windsor is eligible to claim weekly benefits pursuant to section 13 of the Schedule.

2. Mr. Windsor is not barred from proceeding with this arbitration proceeding pursuant to section 26(2) of the Schedule.

3. Mr. Windsor is entitled to his expenses incurred in respect of the arbitration only with respect to one half of the hearing day.

March 17, 1997

David Evans Arbitrator

Date

Footnotes

1. 1In this decision, the term "Schedule" will be used to refer to Regulation 672, the Statutory Accident Benefits Schedule — Accidents On or Between June 22, 1990 and December 31, 1993.
2. 2Jarvis and Jevco Insurance Company (April 26, 1996) OIC A-006063; Cheetham and Pilot Insurance Company (June 28, 1996), OIC A-008036
3. 3(November 15, 1991), OIC A-000055
4. 4(June 14, 1995), OIC A-013676
5. 5(October 12, 1995), OIC A-015549
6. 6(June 12, 1996), OIC P-004204