Neutral Citation: 1998 ONFSCDRS 4

FSCO A98-000023

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOHN REITH

Applicant

and

HALIFAX INSURANCE COMPANY

Insurer

DECISION

Introduction:

This case concerns a dispute over the correct amount of income replacement benefits to which the Applicant, John Reith, is entitled. Mr. Reith was injured in a motor vehicle accident on March 20, 1997. At the time of the accident, Mr. Reith was enrolled in a job-orientation programme with United Parcel Service (UPS) and was expected, upon completion, to begin work as a casual driver.

As a result of the accident, Halifax paid Mr. Reith income replacement benefits¹ based on his orientation pay of $6.85 per hour, rather than the pay rate of $11.30 per hour he would have been earning as a casual driver, had the accident not happened. The issue in this hearing is:

1. What is the correct amount of income replacement benefits to which Mr. Reith is entitled?

Mr. Reith also claims interest on any amounts owing and his expenses incurred in the hearing.

Result:

1. Mr. Reith is entitled to an income replacement benefit based on an hourly rate of $11.30 and an annual income of $18,000 from March 27, 1997 to date and ongoing, subject to any deductions for post-accident income.

2. Mr. Reith is entitled to interest on any amounts owing.

The Legal Issue:

Under the Schedule, an applicant's income replacement benefit is usually an amount based on his earnings at the time of the accident. However, if an applicant can establish that he was entitled to start work within a year of the accident under a contract of employment that predated the accident, he may recover benefits based on the gross income payable under the contract of employment. To succeed in this regard, Mr. Reith must establish, under section 4.3 of the Schedule, that he:

i. was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing, and

ii. as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment he or she was entitled to start under the contract.

The parties agree that at the time of the accident Mr. Reith had a legitimate contract of employment with UPS to begin work as a casual driver on March 24, 1997, four days after the accident. They also agree that the contract was made before the accident and evidenced in writing. It was also not disputed, for the purposes of this hearing, that because of his injuries from the accident Mr. Reith cannot work as a UPS driver. The difficulty here is that Mr. Reith was already employed by UPS at the time of the accident; the parties dispute whether Mr. Reith's benefit rate should be based on the wage he was earning (as a trainee) at the time of the accident, or on the hourly amount he anticipated earning as a casual driver.

Mr. Reith argues that his benefit rate should be based on his future earnings as a casual driver, extrapolated to reflect an annual income in accordance with section 8(5).

Halifax argues that at the time of the accident Mr. Reith was not entitled to "start work within one year under a legitimate contract of employment" because he had already begun his employment with UPS. It suggests that his anticipated earnings as a driver amounted only to a pay raise, rather than a separate contract of employment. Halifax determined, therefore, that Mr. Reith did not qualify under section 4.3, but instead was only eligible under section 4.1, as a person "employed at the time of the accident." As such, under section 8(1) he is entitled to a rate based on his earnings in either the 4 week or 52 week period before the accident. In this case, Halifax calculated benefits at $88.14, which the parties agree is the correct rate based on the 52 week period before the accident and more advantageous than the four-week period preceding the accident.

Factual Background:

In February, 1997, Mr. Reith applied to UPS for a position as a casual driver. After successfully completing two interviews, a road test, and a medical, he was offered and accepted the position of "casual driver." Under the relevant collective agreement, casual drivers are not guaranteed any hours of work. They are "on call" and can only be used to replace drivers away on vacations, sick leaves, approved leaves of absence, and holidays. Mr. Reith testified that he was told during the interview that although there was no guarantee of hours, he would likely get between 10 to 50 hours a week. He was also told that he could increase his chances of getting work if he was "eager" and showed up at the depot every morning.

I found Mr. Reith to be a forthright witness and accept his evidence that he was motivated to get as many hours as possible, with the hope of eventually becoming a full-time driver. His evidence was confirmed by Mr. Stuart Morrish, Employee Services Manager of UPS, who testified that although it is impossible to predict how many hours a casual employee may work in a given week, they usually work every day and can enhance their chances for work by showing up at the depot each morning.

Before Mr. Reith was eligible to begin working as a driver, he was required to successfully complete the New Driver Orientation course that UPS runs for all new trainees. UPS pays its trainees $6.85 per hour for the five consecutive days over which the course runs. On the first day, Mr. Reith signed a document acknowledging that "I am being paid at a rate of $6.85/hour for my orientation training."²

Mr. Reith attended the course from March 17th to19th, and was performing well. Unfortunately, on March 20, the fourth day, he was injured while a passenger in a car being driven to work by a co-worker. Mr. Reith suffered a broken neck and a fractured collar bone. He was only recently able to return to work, in a sedentary position with Manulife Financial. He testified that he cannot now perform the job of a casual driver because he is not able to manage the lifting required - up to 70 pounds - or turn his head adequately to insure safe driving.

Mr. Morrish testified that Mr. Reith scored well on all the tests that he completed during the orientation week, and concluded, after reviewing his file, that he "would have proceeded through the employment process" to become a casual driver as of March 24th, 1997. I find that had the accident not occurred, it is highly probable that Mr. Reith would have been approved for work as a casual driver and been eligible for assignments on March 24, 1997, at the rate of $11.30 per hour.

Submissions and Findings:

Mr. Reith submits that his benefit rate should be based on his future earnings as a casual driver, at $11.30 per hour, extrapolated to reflect an annual income, rather than on the lower hourly wage of $6.85 which he was earning as a trainee at the time of the accident.

Halifax argues that Mr. Reith is not entitled to the higher rate because it represents only a pay increase rather than a future contract of employment. Although it agrees that his contract was "made before the accident," as required under section 4.3, it submits that Mr. Reith was already employed under that contract as a casual driver at the time of the accident. He therefore does not, according to Halifax, satisfy the requirement under section 4.3 for a future contract of employment.

I must determine whether section 4.3 compensates an applicant for prospective work with the same employer for whom he was working at the time of the accident. This is a question of statutory interpretation.

In a recent decision interpreting the provisions of the Schedule,³ Laskin J.A. of the Ontario Court of Appeal noted that "the modern approach to statutory interpretation calls on courts to interpret a legislative provision in its total context." Justice Laskin stated that the court's interpretation should satisfy three criteria, namely to "comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning."

In this case, after applying those three criteria, I find that section 4.3 supports Mr. Reith's position.

I consider first the legislative text. Section 4.3(i) covers an applicant who was "entitled at the time of the accident to start work within one year under a legitimate contract of employment...". (my emphasis). In my view, this includes a person who entered an employment contract before the accident, but has yet to start the actual work for which he was contracted to perform. In this case, Mr. Reith was contracted to perform work as a casual driver. At the time of the accident, however, he was merely a trainee, and had not yet started the work for which he had been hired. In fact, Mr. Morrish testified that Mr. Reith would not be allowed to begin work as a driver until he successfully completed the orientation program. Mr. Reith accepted this arrangement, and agreed to receive $6.85 during the orientation week. Consequently, he was, at the time of the accident, in a position to "start work," as required by section 4.3(i).

Moreover, in this case the distinction between these positions is not superficial, as both the essential tasks and the pay differ vastly. As a trainee, Mr. Reith earned the minimum wage of $6.85 per hour, attended classes at an orientation centre, and was responsible primarily for learning the policies and procedures of UPS; a driver, by contrast, earns $11.30 per hour and is on the road each day delivering parcels.

I find that although Mr. Reith signed employment documents before the accident that refer to him as a "casual driver," he was in fact working then merely as a trainee. The job which formed the basis of his employment contract, namely that of a casual driver, had not yet begun. It is reasonable to infer that UPS recorded him as a casual driver from the outset merely out of administrative convenience, given that the orientation week was only five days long, most candidates succeed in becoming drivers, and the parties could thereby avoid redoing all the paperwork one week later.

I conclude, therefore, that interpreting section 4.3 to include future work with the same employer is consistent with the legislative text.

I consider next the legislative purpose. Section 4 is designed to compensate disabled workers at a rate roughly equivalent to what they were earning at the time of the accident.⁴ It recognizes, however, that certain individuals may have been entitled at the time of the accident to begin work at a higher rate than what they were then earning. The legislation compensates for that eventuality, provided that the employment is not speculative but is a "legitimate contract" made "before the accident" and "evidenced in writing."

I find that section 4.3 is intended to compensate for a job promised but not yet realized at the time of the accident. That is precisely the situation Mr. Reith was in: he was offered and accepted, in writing, the position of casual driver, but had not begun that work when this accident happened. Had this accident not happened, Mr. Reith would, in all probability, have successfully completed the orientation week and begun work as a casual driver, the job for which he contracted.

My view that the legislation is designed to compensate for prospective work with the same employer is supported by section 4.3(ii), which contemplates the insurer paying benefits on the basis of "the essential tasks" of the job the applicant "was entitled to start" under the contract. By making the payment of benefits contingent on an inability to perform the prospective job tasks, the legislators made the job, rather than the employer, the focus of compensation. Thus benefits do not increase simply because of anticipated or even promised pay raises, but because before the accident, the employee was promised a job distinct from what he was then doing. Whether the job is sufficiently distinct will depend on the facts in each case; in this case, for the reasons set out above, I find that the work promised to Mr. Reith was entirely different from what he was performing at the time of the accident.

The final consideration is whether this interpretation leads to a reasonable and just result. The approach that I have taken means that Mr. Reith will be compensated at a rate commensurate to what he would have been earning had the accident not happened. This seems both sensible and fair. On the other hand, using Halifax's approach means that even though Mr. Reith was promised and scheduled to begin a higher paying job four days following this accident, he is left with benefits based on a temporary, minimum wage position as a trainee. That strikes me as unfair. It also doesn't make sense, because if Halifax is right, Mr. Reith would have been better off if this accident happened either before or after the orientation week. If before, he had yet to start any work with UPS, and therefore would have been paid at the rate of $11.30 per hour, being the income payable under the contract of employment⁵. If the accident happened after, he would have already been working as a casual driver, and entitled to the driver's wage in accordance with sections 4.1 and 8(1). It strikes me as arbitrary to penalize Mr. Reith for being in limbo, as a trainee, when this accident happened.

For all these reasons I interpret section 4.3 to permit Mr. Reith to recover benefts based on his promised but unrealized job as a casual driver.

The remaining difficulty is how to calculate that amount on a weekly basis. As noted above, casual drivers work "on call," and UPS does not guarantee a minimum number of hours per week. Mr. Morrish testified that there are currently no casual drivers employed in the Kitchener area, which is where Mr. Reith was hired. UPS therefore did a projection on the basis of a casual driver employed in London, which has comparable demographics. That employee worked 1,392 hours in 1997, earning an annual income of $18,040.26. Mr. Reith seeks a weekly benefit based on the same annual salary.

Halifax raised some valid concerns over this approach. I heard about only one driver, and in a different jurisdiction. Mr. Morrish conceded that it is impossible to say whether the hours worked by the London driver are average or unusual. At the same time, however, Mr. Morrish testified that casual drivers usually work each day, and Mr. Reith was told that he would likely work between 10 to 50 hours per week. I also accept that because he was motivated, he would maximize whatever opportunities were made available to him. Finally, I find it significant that the London driver used as a comparison worked approximately 30 hours⁶ per week in 1997, which is the midpoint of the 10 to 50 hour range quoted to Mr. Reith in his interview with UPS. In other words, the salary earned by the London driver, on which Mr. Reith wishes to rely, is consistent with what UPS advised during the interview and Mr. Morrish stated at the hearing. For these reasons, although the evidence is not ideal, I accept that, on the balance of probabilities, Mr. Reith would have earned an annual income of approximately $18,000, and Halifax should pay him benefits on that basis.

Order:

1. Mr. Reith is entitled to an income replacement benefit based on an annual income of $18,000, from March 27, 1997 to date and ongoing, subject to any deductions for post-accident income.

2. Mr. Reith is entitled to interest on any amounts owing.

3. Mr. Reith is entitled to his expenses incurred in respect of the arbitration.

July 15, 1998

Deena Baltman

Arbitrator

Date

Appendix

Hearing:

The hearing was held in Kitchener, Ontario, on June 29, 1998, before me, Deena Baltman, Arbitrator.

Present at the Hearing:

Applicant:

John Reith

Mr. Reith's Representative:

Mark Grossman Barrister and Solicitor

Halifax's Representative:

Gregory Brimblecombe Barrister and Solicitor

Witnesses:

John Reith, the Applicant Stuart Morrish, Employee Services Manager of UPS

Exhibits:

Exhibit 1

Exhibit Brief

Exhibit 2

Applicant's statement

Exhibit 3

Application for Accident Benefits

Exhibit 4

Employee Processing Form

Exhibit 5

Collective Agreement - section 26.1

Footnotes

1. 1Under The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 403/96.
2. 2Exhibit 1, p.10
3. 3Bapoo and Co-operators General Insurance (1997) 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616 (C.A.) This decision considered an earlier version of the Schedule, dealing with accidents before January 1, 1994, but I believe its approach to statutory interpretation is equally valid under the current Schedule.
4. 4Or, where it results in a more favourable calculation to the insured, at a rate which reflects his earnings within the year leading up to the accident.
5. 5In accordance with section 8(5).
6. 6Annual earnings of $18,040 divided by $11.30 per hour, and 52 weeks per year, yields approximately 30 hours per week.