Neutral Citation: 2001 ONFSCDRS 13

FSCO A00-000322

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

CHRISTOPHER SHEARSTONE

Applicant

and

YORK FIRE & CASUALTY INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

John Wilson

Heard:

By written submissions received by the Offices of the Financial Services Commission of Ontario in Toronto, on November 20, 2000

Appearances:

Patrick Mazurek for Mr. Shearstone

Jamie Pollack for York Fire & Casualty Insurance Company

Issues:

The Applicant, Christopher Shearstone, was injured in a motor vehicle accident on March 27, 1998. He applied for statutory accident benefits from York Fire & Casualty Insurance Company ("York"), payable under the Schedule.¹ The parties were unable to resolve their differences through mediation, and Mr. Shearstone applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Whether or not payments received by the Applicant pursuant to section 43 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Schedule A, should be considered as "income from employment" for the purposes of the Applicant's entitlement to weekly income replacement benefits.

Result:

Short-term disability payments pursuant to section 43 of the Workplace Safety and Insurance Act may be considered as "income from employment" for the purposes of the Applicant's entitlement to weekly income replacement benefits.

EVIDENCE AND ANALYSIS:

There was no evidence tendered as part of this preliminary issue hearing. It is understood, however, that Mr. Shearstone had worked as an assembly line worker for Chrysler and had been in receipt of certain temporary workers' compensation benefits following a workplace accident. He had, however, returned to work just prior to the motor vehicle accident.

Section 6 of the Schedule provides:

(1) The amount of the income replacement benefit shall be,

(a) for each of the first 104 weeks of disability, 80 per cent of the insured person's net weekly income from employment determined in accordance with section 61; and

(b) for each week after the first 104 weeks of disability, the greater of the amount specified in clause (a) and $185.

The definition section of the Schedule does not define the phrase "income from employment." Section 2(8) does, however state that "... payments of severance pay or termination pay are not payments for loss of income. "Other sections of the Schedule go on to consider collateral source deductions from income replacement benefits, once they have been determined, but do not deal specifically with the issue of what income streams can be considered "income from employment."

The Insurer, in its submissions, raised the legislative history of statutory accident benefits in support of its argument in favour of discounting Mr. Shearstone's workers' compensation benefits as income. Specifically, it relies on changes between the Bill 164 and Bill 59 Schedules which removed any reference to workers' compensation benefits as qualifying income.

It also points to decisions arising from the Bill 68 legislation, which interpret the Section 12(7) phrase "income... from occupation or employment" as excluding consideration of such revenue as income for the purposes of the calculation of statutory accident benefits under the Bill 59 Schedule. I disagree.

The statutory scheme of no-fault motor vehicle accident benefits has undergone many changes over the past years. Although the underlying principal of providing some accident benefits to insured persons without regard to the need to prove fault has remained consistent, the schemes to deliver such benefits have varied considerably.

In the 1980's, Schedule C" of the Insurance Act R.S.O. 1980, c. 218, provided the foundation for such benefits. Later on, three subsequent legislative schemes, incorporating differing premises, provided the vehicle to deliver no fault benefits. In the context of the Bill 68, Bill 164, and Bill 59 schemes, regulations, known as the Statutory Accident Benefits Schedule, set out most of the relevant provisions of the no-fault system. Each of these legislative schemes took different approaches to the qualification for benefits and to the degree to which an insured could access the court system for further compensation.

The Schedule C" provisions for the receipt of weekly benefits were as follows:

Subject to the provisions of this Part, a weekly payment for the loss of income from employment for the period during which the insured person suffers substantial inability to perform the essential duties of his occupation or employment, provided,

(a) such person was employed at the date of the accident;

Section 3 (a) of Subsection 2, Part II, further provided that a person would be deemed to be employed if . . . actively engaged in an occupation or employment for wages or profit at the date of the accident." It did not, however, directly define "employment" or "income from employment."

Bill 68, the Ontario Motorist's Protection Plan was the next stage in the development of no-fault. It was, perhaps, the first real attempt to shift compensation for personal injury in motor vehicle cases to a no-fault system of compensation. As Stayshyn J. noted in Hernandez v. Palmer [1992] O. J. No. 2648:

Prior to 1990, Ontario's automobile accident compensation system consisted essentially of a third-party liability system, in which there was an unrestricted right to sue tortfeasors for bodily injury claims, including death. Limited no-fault benefits payable on a first-party basis (i.e., from the victim's own insurer) were also available as a mandatory part of all automobile insurance policies.

It is clear that the OMPP represents a fundamental shift in approach from the previous regime. The right to sue in tort has been curtailed and substantially enhance no-fault benefits are now payable on a first-party basis to all persons suffering injury in an automobile accident, regardless of ability to prove fault.

The Bill 68 Schedule defined the entitlement to weekly benefits in Part IV, section 12. Section 12(2) provided:

The following qualifications apply to an insured person who claims a weekly benefit under subsection (1)

(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

Section 12(7) (1) of the Schedule, which covers the calculation of gross weekly income for benefit purposes, provides that the quantum will be determined with reference to ". . . gross weekly income from his or her occupation or employment."

The Bill 164 Schedule, which further reduced the alternative of litigation, developed a more elaborate approach to the definition of entitlement. Since it comprises a virtually comprehensive code of entitlement to accident benefits, it necessarily provides more detail and precision in its provisions.

Section 7(1) of the Schedule retains the requirement that a claimant be "employed" at the time of the accident to qualify for income replacement benefits, but goes on to expand and qualify the definition of "employment" in several key areas.

Section 5 of the definition section of the Schedule provides:

For the purpose of this Regulation, a person is employed if, for salary, wages, other remuneration or profit, the person is engaged in employment, including self-employment, or is the holder of an office, and "employment" has a corresponding meaning.

Sections 2, 3, and 4 of the Schedule further make it clear that "employment," for the purposes of the Schedule, is a concept that includes activities related to, but not necessarily identical to the performance of specific workplace functions. These include being on strike or locked out from employment, maternity leave, or having a firm contract for future employment, or having a recent history of employment. The common feature seems to be that the claimants merely have an attachment to that particular employment to be considered "employed."

Given that Bill 164 most significantly restricts a claimant's right to sue in tort for damages, it is appropriate that the Schedule widely defines "employment," since income from such employment forms the basis for the calculation of much of the significant compensation available to an applicant.

As Charron J. A. noted in Quiroz v. Wallace, 1998 CanLII 3246 (ON CA), 40 O.R. (3d) 737:

Under Bill 164, a comprehensive system of enriched accident benefits were made available to all accident victims to protect against pecuniary losses, regardless of fault. This system was intended to eliminate the need to sue for pecuniary losses in all cases.

The Bill 59 Schedule retreated from the comprehensive approach, and reinstated greater access to the tort system for pecuniary losses, as well as non-pecuniary losses, subject to a threshold requirement.

Section 4 of Part II of the Schedule sets out the criteria for the payment of income replacement benefits.

The insurer shall pay an insured person who sustains an impairment as a result of an accident an income replacement benefit if the insured person meets any of the following qualifications:

The insured person was employed at the time of the accident and, as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of that employment.

The Bill 59 Schedule does not define "employment" or "income from employment." Nor does the Schedule specifically address the entitlement issue for persons receiving workers= compensation benefits.

It does, however, indicate clearly that benefits are to be paid to those who can be defined as employed," based on their employment income, as well as certain specifically outlined categories of persons, who may not have such a close attachment to employment.

As can be seen from a brief overview, the provisions of the various no-fault benefit schemes differ substantially. Anne Sullivan remarked in Driedger on the Construction of Statutes at p. 458 (3d edition, Butterworth's, Toronto, 1994 at p. 168):

The chief drawback to the use of legislative evolution, whether prior or subsequent, is that it is often difficult to distinguish amendments that are meant to clarify or confirm the law from amendments that are meant to change it.

Because of this difficulty, the technique of tracing legislative evolution must be used with caution.

At page 459, Ms. Sullivan concludes: "Where changes in the wording of a provision can plausibly be explained in more than one way, the court must look to other considerations to resolve the interpretative problem."

This series of legislative schemes is not just a matter of lawmakers tinkering with a single, continuous approach to compensation. Each initiative is a complete, self-contained approach in itself, albeit one that includes some form of no-fault compensation.

As Kozak J. noted in Wawanesa Mutual Insurance Co. v. Ontario Provincial Police (Commissioner) (2000 CanLII 22335 (ON SC), 47 O.R. (3d) 332 ), "Bill 59 presents a complete code for dealing with the deductibility of collateral benefits and the interface between first and third party claims in the 22 subsections of s. 267.8." Likewise, I find that Bill 59 provides a complete codification of the eligibility requirements for qualifying income under Section 4. Consequently, I prefer to look to more basic considerations in interpreting its provisions.

To determine whether the short-term Workplace Safety and Insurance benefits count in setting the quantum of Mr. Shearstone's benefits, it is necessary to begin by evaluating them in the clear light of the Bill 59 requirements; whether they are income from employment or not.

The Canadian Oxford Dictionary, (Oxford University Press, Toronto, 1999) defines employment as:

The act of employing or the state of being employed. 2. The prevalence or proportion of this in a given area . . . 3. A person's regular trade or profession.

The Schedule, in accordance with modern practice is published in both English and French.

The French equivalent "emploi" used in the section is equally broad. Le Petit Robert (Dictionaire alphabétique et analogique de la langue française) includes in the definition of "emploi."

(Déb. XVIIe) vx. Occupation (de qqn).<raisonner est l'emploi de toute ma maison>Mol. Mod. Ce à quoi s'applique l'activité rétribuée d'un salarieé V. Gagne-pain, place, situation, travail...

As the British Columbia Court of Appeal noted, concerning bilingual statutory language, in R. v. O Donnell 1978 CanLII 2657 (BC CA), [1979] 1 W.W.R. 385 (B.C.C.A.) at 389:

The words in both versions, of necessity, must be construed with the same meaning. So, if one version is clear and unambiguous and the other version has the same meaning as well as others, it follows that, when construing, the common meaning must be accepted.

Such an approach would appear to confirm that the wider meaning of employment was in the minds of those who draughted the current Schedule.

If the Workplace Safety and Insurance Board (WSIB) payments to Mr. Shearstone could constitute income arising from the act of employing, the state of being employed, or from his regular trade or profession, then they ought to be included as qualifying income for the purposes of the calculation of the quantum of his benefits.

The Workplace Safety and Insurance Act (supra) provides for two, quite different, types of benefits. A worker, who is injured on the job, and is likely to be able to return to his occupation will receive short-term benefits.

A person who has suffered from a serious disability that would prevent him or her from resuming employment may receive a full or partial long-term benefit or pension to compensate for his or her loss of earning capacity. Only the short-term benefits are at issue in this matter.

Entitlement to short-term benefits under the Workplace Safety and Insurance Act (supra) requires that a worker sustain a job-related injury, while working for an eligible employer. If a subsequent non-compensable injury (such as a motor vehicle accident) intervenes to prevent a return to active work, a claimant may be at risk of losing entitlement to any workers' compensation benefit.

Section 25(1) of the Workplace Safety and Insurance Act (supra) provides that the employer must continue to pay for an injured worker's benefits during the first year of absence. Section 41(4) of the same act underlines the positive obligation of the employer to keep a position open for the injured worker. Likewise section 41(6) creates a duty upon the employer to accommodate an employee, upon his return to work.

The injured employee has an obligation to attempt to prepare himself for a return to the workplace, and, indeed the payment of benefits may be contingent remaining actively involved in this process. Clearly the bonds of employment continue past the date of a workplace injury.

That the employment relationship can continue throughout the hiatus from active work is apparent, even from the limited factual background of this case. Mr. Shearstone was back to his duties at Chrysler when the accident took place. The clear inference is that the employment relationship was not severed by the workplace accident.

It may be said that although short-term benefits may not constitute direct compensation for time spent working, they are consequential to the employment relationship, and may be considered as arising from ". . . the state of being employed."

Such a conclusion would be consistent with the decision of Cromarty J. in Pineda v. Co- operator's Group Ltd., 1985 CanLII 2094 (ON HCJ), 51 O.R. (2d) 787 (H.C.) in which, he, while interpreting the "Schedule C "phrase loss of income from employment, found that short-term worker’s compensation benefits could be considered "income from employment." As he noted:

While receiving worker’s compensation benefits in the absence of a manpower or adult occupational retraining programme does not in and by itself constitute being "actively engaged in an occupation or employment" it is to be noted that the provision does not require active employment or occupation. It merely requires "employment or occupation." As the plaintiff was under a contract of employment and received "payments" in the form of worker’s compensation benefits, I conclude that she falls squarely within this provision.

As Lord Loreburn observed in North British Railway v. Birdhill Coal and Sandstone [1910] A.C. 116, at 127 (H.L.):

When an Act of Parliament uses a word which has received judicial construction it presumably uses it in the same sense.

I note that the wording referred to in Pineda (supra) is substantially the same as is used in the Bill 59 Schedule, and find that "employment" under the Bill 59 Schedule does not require "active participation."

The word "income" used in s. 6(1) (a) of the Schedule is defined by the Canadian Oxford Dictionary (supra) as:

n. the money or other assets received periodically or in a year from one's business, work, investments, etc.

The Petit Robert defines the equivalent French term used in 6 (1) (a), "revenu" quite broadly:

Ce qui revient à qqn à titre d'interêt, de rente, et par ext. de salaire, etc. V. Gain produit, profit, rapport. Avoir de gros revenus. Revenu d,un capital V. Intéret, rente. Revenus fonciers. Revenu du travail. V. Salaire. Revenu assigné à un chef d'État V. Dotation. Produire un revenu: rapporter, rendre...

"Revenu" is clearly income that need not be linked to the expenditure of work, or the performance of one's own profession. Likewise, the English term "income" as used in the Schedule should not be narrowly defined.

I note, as well, that s. 56 (1) (v) of the Income Tax Act, R.S.C. 1985 c.1, as amended, provide(s) that "compensation received under an employee's or workers' compensation law of Canada or a province in respect of an injury, a disability or death"; be included in the in a taxpayer's income. For the purposes of the Income Tax Act at least, SIB benefits are income.

I see no cogent reason that "income" for the purposes of the Schedule should exclude income that meets the definition in the Income Tax Act, provided, of course that the Income meets the other criterion of the Schedule: that it stems from the employment relationship. It would appear likely that the words "from employment" used in conjunction with "income" were intended merely to differentiate the income stream related to employment from that arising from investments or other "unearned income" which is clearly not covered by the Schedule.

The thrust of the income replacement benefits in the Bill 59 Schedule is to replace income lost due to a motor vehicle accident, up to the statutory maximums. To arbitrarily exclude Mr. Shearstone's pre-accident income from a workers' compensation plan, would artificially distort the calculation of his income replacement benefit. He would be paid, in fact far less than the normal and usual wage he was receiving from his employer.

That the Insurer’s approach would create a significant anomaly is apparent by making a hypothetical change in the fact situation. Had the Applicant been on regular, paid, vacation leave prior to the accident, the amounts received as vacation pay would not have been deducted from the calculation of his qualifying income. His income would have been calculated based on his pay-stubs for the weeks prior to the accident, notwithstanding the fact that some of this pay would not have been due to the active participation in his occupation. (See Ford and Wawanesa, Appeal Order P00-00005, Director’s Delegate Draper, August 4, 2000).

Even if an employment relationship has been completely severed, and an applicant is in receipt of employment insurance benefits for part of this time, he or she may use this employment insurance income to qualify for an income replacement benefit.

The common thread running through these provisions is that the indemnity, in this case the income replacement benefit should mirror the loss, subject to the legislative limits. While there may be some justification for excluding "windfalls" that may distort an applicant’s income picture, there is no compelling reason for extending the exclusion to payments which only mirror regular income from employment.

In accordance with WSIB practice, the calculation of the quantum of the workers' compensation benefits received by Mr. Shearstone prior to the accident was a function of his normal income from employment. Together with the few days of actual work prior to the accident level of benefits, the workers' compensation (WSIB) benefits would provide a reasonable picture of his usual level of income. Removing one or the other can only create a distortion in the income calculations.

Section 59 of the Schedule deals specifically with workers' compensation benefits in the context of accident benefits' claims. It addresses the issue of "double recovery" by releasing an insurer from the obligation to pay accident benefits when an applicant is entitled to receive workers compensation benefits. A similar exclusion clause was dealt with by Cromarty J. in Pineda v. Co-operator’s (supra).

If an individual otherwise falls within Part II of Sch. 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 to me that the exclusion clause was meant to pertain to the specific injury for which the individual is receiving workers compensation benefits. The 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.

The only other provisions directly referring to workers compensation benefits appear in the context of the deduction of post-accident benefits. None of these provisions could be construed as mandating the exclusion of WSIB benefits from the calculation of income replacement benefits.

The fact that the legislation specifically addresses workers compensation issues in matters such as post-accident collateral benefits, election between the two systems, and eligibility to claim statutory accident benefits, suggests that the failure to specifically mandate the non-eligibility of workers compensation income was more than an oversight. As Ruth Sullivan mentions in Driedger on the Construction of Statutes (supra).

Where a provision specifically mentions one or more items but is silent with respect to other items that are comparable, it is assumed that the silence is deliberate and reflects an intention to exclude the items that are not mentioned.

Sharpe J. A., in Smith v. Co-operator’s Insurance Co. 2000 CanLII 4138 (ON CA), [2000] O.J. No. 408 C.A., summarized the contemporary approach to be taken in the reading of statutes: "According to modern principles of statutory interpretation, the statutory scheme should be read as an integrated whole."

This view is consistent with the rule in Heydon’s Case (1584) 3 Co. Rep. 7a, 76 E.R. 637, or the mischief rule which provided, inter alia, that after identifying the "mischief and defect," and the remedy that Parliament chose to cure it, a judge should interpret the overall legislation in the context of those legislative goals.

The true reason of the remedy; and then the office of all the Judges us always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico. (Heydon’s Case, supra at p. 638.)

The mischief rule lives on in the form of purposive interpretation of legislation which has received the endorsement of both the Ontario Court of Appeal and the Supreme Court of Canada. (See Ontario Home Builder’s Association v. York Region Board of Education 1996 CanLII 164 (SCC), [1996] 2 S.C.R. 929 and Ontario English Catholic Teachers 'Association et al. v. Ontario (Attorney General) 1999 CanLII 2953 (ON CA), 44 O.R. (3d) 7 C.A.).

Section 268.3 (1) of the Insurance Act (supra) provides:

The Commissioner may issue guidelines on the interpretation and operation of the Statutory Accident Benefits Schedule or any provision of that Schedule.

The Commissioner's Guideline No. 2/96 entitled Guideline for Statutory Accident Benefit Applications, the Claims Process and the Mediation Process (Bill 59) identifies some of the goals of the Bill 59 Schedule under the heading "Insurer's Responsibilities."

Pay for reasonable measures to reduce or eliminate the effects of any disability resulting from injuries sustained by a claimant in an accident and to help their reintegration into their family, the labour market and the rest of society.

I accept that this guideline provides a reasonable restatement of the general purposes of the Bill 59 Schedule. I find that section 4 of part II of the Schedule should be interpreted in a manner that is congruent with the general purposes of the Schedule as outlined above.

Sections 7(1) 1. i and 7(2) (c) of the Schedule make it clear that post-accident payments from the W.S.I.B. to an applicant will be deducted from any post-accident income replacement benefits.

If the Insurer’s rationale is followed, an applicant would be in the odd position of having benefit entitlement calculated, without regard to his or her W.S.I.B. income, while the full amount of the W.S.I.B. benefit could be deducted from the motor vehicle accident- related income replacement benefit. The result could easily be a negative number. In the words of the Applicant, this would create an "obvious conceptual incoherence in the SABS . . ."

The courts have long held a view that law should make sense. The old maxim Lex est ratio summa qua jubet quae sunt utila et necessaria et contrariaprohibet recognized that law should address what is useful and necessary and avoid the contrary. From this has developed the presumption that lawmakers, and legislative draughts-persons, intend to avoid absurdities, or provisions of laws that can be characterized as logically contradictory, nonsensical or ridiculous. To quote Driedger (Driedger on the Construction of Statutes supra) again, at p. 93:

The court’s jurisdiction to avoid absurdity parallels and complements its jurisdiction to promote legislative purpose. Whereas purposive analysis justifies the preference for interpretations that lead to good consequences, which are presumed to be intended, avoiding absurdity justifies the rejection of interpretations that lead to bad consequences, which are presumed to be unintended.

I agree with the Applicant that the legislature could not have intended an "obvious conceptual incoherence," and find that the Insurer’s interpretation cannot be found to be in accordance with the "integrated whole" of the legislation.

I cannot accept that an interpretation of Section 4, disallowing temporary workers compensation benefits falls within the plain meaning of the section. Nor can it be integrated into the overall compensation scheme created by the Bill 59 Schedule, since, to do so could leave, unaddressed, a major effect of the motor vehicle accident. In situations where workers' compensation benefits were received during the qualifying period, the true loss of income due to an inability to return to work would not be compensated.

I find that, in the context of the Bill 59 Schedule, the words "income from employment" used in section 6(1) (a) encompass income received from short-term Workplace Safety and Insurance benefits.

EXPENSES:

I exercise my discretion to award Mr. Shearstone his expenses incurred in this preliminary issue hearing.

February 6, 2001

John Wilson Arbitrator

Date