Neutral Citation: 2002 ONFSCDRS 28

FSCO A01-000103

BETWEEN:

MOHAMMAD REZA FALAHI

Applicant

and

ING HALIFAX INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Lawrence Blackman

Heard:

January 14 and 15, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Frederick Hawa and Manoucher Baradaran for Mr. Falahi

Glenn Harvey-McKean for ING Halifax Insurance Company

Issues:

The Applicant, Mr. Mohammad Reza Falahi, was injured in a motor vehicle accident on March 7, 2000. He applied for statutory accident benefits ("SABs") from ING Halifax Insurance Company ("ING"), payable under the Schedule.¹ ING maintains that Mr. Falahi is entitled to receive workers' compensation benefits and, hence, pursuant to section 59 of the Schedule, is not entitled to SABs. The parties were unable to resolve their dispute through mediation, and Mr. Falahi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In her September 4, 2001 letter, the pre-hearing arbitrator bifurcated the hearing, the ultimate SABs entitlement issues being scheduled for a four-day hearing starting April 15, 2002, and the initial workers' compensation issue to be dealt with in a two-day preliminary issue hearing on January 14 and 15, 2002. The pre-hearing arbitrator framed the preliminary issue as follows:

Is Mr. Falahi precluded, by operation of subsection 59(2) of the Schedule, from entitlement to accident benefits because he made an election under section 10 of the Workers' Compensation Act primarily for the purpose of claiming benefits under the Schedule?

Section 59's initial premise, as stated in subsection (1), is that the insurer is not required to pay SABs in respect of any insured who, as a result of the accident, is entitled to receive benefits under any workers' compensation law or plan. Subsection 59(2) provides, however, a narrow exception to this general rule, namely (as set out in the above pre-hearing recitation of the preliminary issue), where the insured has elected to bring a section 10 action (under the Workers' Compensation Act, R.S.O. 1990, c. W.11, as amended), that action not being made primarily for the purpose of claiming SABs.

At the start of the preliminary issue hearing, both parties agreed (albeit for different reasons) that the subsection 59(2) exception did not apply to the facts of this case. The Insurer maintained that Mr. Falahi made a section 10 election to bring an action, but that his purported election was made primarily for the purpose of claiming SABs. Mr. Falahi, however, submitted that he never made such an election and hence the question as to the primary reason for this non-existent election never arose.

Hence, it seemed apparent that the real issue in dispute between the parties was subsection 59(1), that is, whether Mr. Falahi was entitled to receive benefits under any workers' compensation law or plan. Simply put, Mr. Falahi says he is not entitled, the Insurer says he is. Before hearing evidence or opening statements, I indicated to the parties the importance of the pre-hearing process of "shaking the issue tree" so that all issues in dispute are clearly set out and no one is taken by surprise. I was concerned that Mr. Hawa had evidently only been retained as the Applicant's counsel the prior Friday, that the issues appeared to be shifting, and that the Insurer may now be facing a different case than anticipated.

I allowed the parties an opportunity to discuss this matter in my absence. Upon resuming the hearing an hour and a half later, the parties reiterated their positions concerning subsection 59(2). They both maintained that the issue of Mr. Falahi's entitlement to receive benefits under any workers' compensation law or plan was not before me. Counsel for the Insurer specifically referred me to section 31 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c.16, as amended (" WSIA"), which states that the Workplace Safety and Insurance Appeals Tribunal (the "Appeals Tribunal") has "exclusive jurisdiction to determine," amongst other things, "whether the plaintiff is entitled to claim benefits under the [workers' compensation] plan."

Insurer's counsel also referred me to Sofantzidelis and AXA Insurance (Canada) (OIC A95-000384, May 7, 1997), which held that it is the responsibility of the applicant, not the insurer, to establish that he or she falls within the above-noted exception, and hence, the applicant should lead his or her evidence first, which is what the Insurer argued should be the procedure in this case. I note that Sofantzidelis also holds that the insurer, not the applicant, has the burden of proof of establishing that an insured is entitled to benefits under any workers' compensation law or plan, "because it is invoking an exclusionary provision to deny him benefits."

The Applicant's counsel indicated that his client wished to have the question of his entitlement to benefits under any workers' compensation law or plan decided by the Appeals Tribunal. As both parties agreed that subsection 59(1) was not before me and could not be put before me, and as both parties agreed (again, for different reasons) that the subsection 59(2) exception did not apply, I was at a loss, at this point, as to why this preliminary issue hearing was now required.

Both parties, however, insisted that the preliminary hearing proceed to determine the following reworded issues, agreed to by both counsel:

Did Mr. Falahi elect to bring an action referred to in section 10 of the Workers' Compensation Act?
If the answer to the first question is yes, was that election not made primarily for the purpose of claiming benefits under the Schedule?
Is the Applicant entitled to his expenses of this preliminary issue hearing?
Is the Insurer entitled to its expenses of this preliminary issue hearing?

Result:

The subsection 59(2) exception is not available to Mr. Falahi.
The four-day entitlement hearing scheduled to commence Monday, April 15, 2002 is adjourned sine die. The case administrator shall schedule an early resumption of the pre-hearing discussion for the purpose, amongst others, of setting time lines to allow an application to be made to the Workplace Safety and Insurance Appeals Tribunal for a determination of whether Mr. Falahi is entitled to workers' compensation benefits.
Within ten days of the delivery of this decision, either party may file for my consideration any relevant Offer to Settle or Response to an Offer to Settle made in accordance with Rule 76 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001), should either party request an appointment before me to determine either entitlement to or the amount of expenses, in accordance with Rule 79.

EVIDENCE AND ANALYSIS:

Subsection 59(2) - the "exception" provision

Mr. Falahi was the only witness called. He testified with the assistance of a Farsi-speaking interpreter. On March 7, 2000, Mr. Falahi was injured while driving a tractor-trailer for Northridge Transport Ltd. ("Northridge"). This single-vehicle accident occurred as Mr. Falahi was turning from southbound Highway 28 onto eastbound Highway 134 in Peterborough County. The load shifted inside the trailer, causing the vehicle to roll over onto its right side. Mr. Falahi was charged under the Highway Traffic Act, R.S.O. 1990 c. H-8, with careless driving and with carrying an insecure load (the latter offence also being laid against Northridge).

Written statements given by Mr. Falahi and Mr. Robert Tamburro (Northridge's operations manager) assert that Mr. Falahi was self-employed at the time of the accident and that Northridge did not hire Mr. Falahi but rather his company, Japan Lines. It is further maintained that Mr. Falahi paid for his own fuel, engine components, cleaning and maintenance, and that Northridge paid for the Applicant's insurance, but then charged that back to him by deducting seven per cent of his gross income. I make no findings regarding these specific alleged facts.

The following dates are important:

March 7, 2000 the motor vehicle accident

March 8, 2000 application to a private insurance carrier for weekly benefits

March 9, 2000 application for SABs

April 11, 2000 Report of Injury to the Workplace Safety and Insurance Board (the "Board")

June 15, 2000 Assignment of Workplace Safety & Insurance Benefits ("WSIBs") approved by the Board

June 21, 2000 Election signed to receive WSIBs

August 15, 2000 Mr. Falahi writes the Board that he wishes to be "covered under Halifax Insurance," not WSIBs

October 17, 2000 Mediation commenced

September 4, 2001 Pre-hearing discussion held

September 6, 2001 letter from Mr. Baradaran to ING that his client "has at the present time expressed his intention to us to take legal action against your insured, Northridge Transport Ltd. for pain and suffering."

Mr. Falahi, testified that he withdrew his claim for WSIBs, by letter dated August 15, 2000, because a Board representative told his wife that he was not entitled to WSIBs.

In Gebru and Coseco Insurance Company (FSCO A00-000709, September 11, 2001), upheld on appeal (FSCO P01-00043, January 7, 2002), Arbitrator Renahan dealt with the difficulty that subsection 59(2) refers to legislation that has been repealed. He states:

The Workers' Compensation Act, R.S.O. 1990, c.W.11, as amended, was repealed effective January 1, 1998.² Section 15(b) of the Interpretation Act, R.S.O. 1990, c.I.11 deals with references in legislation to repealed legislation. Among other things, it provides that a reference in an unrepealed regulation to a repealed Act, shall be construed to be a reference to the provisions of any substituted Act relating to the same subject matter. The substituted Act in this case is the Workplace Safety and Insurance Act, 1997, S.O. 1997, c.16.

Section 10 of the repealed Workers' Compensation Act deals with the rights of a person whose injuries occur in circumstances where the worker is entitled to claim workers' compensation benefits and where the worker is also entitled to claim damages in a Court action against some person other than his or her employer. Section 10 sets out the procedure for the worker to follow in order to elect to claim either workers' compensation benefits or damages in a Court action. Section 30 of the Workplace Safety and Insurance Act, 1997, deals with the same subject matter. Accordingly, I construe the reference to section 10 of the Workers' Compensation Act in the Schedule as a reference to section 30 of the Workplace Safety and Insurance Act, 1997.

I agree with this analysis.

For an applicant to meet the subsection 59(2) exception, two prerequisites must be met, namely:

The Applicant has elected to bring an action referred to in section 30 of the WSIA, namely "an action against a person in respect of the injury or disease;" and,
That election must not have been made primarily for the purpose of claiming statutory accident benefits.

Mr. Falahi stated that he had not commenced an action against anyone other than ING. No evidence was presented of any action having been commenced by Mr. Falahi, other than this arbitration proceeding for SABs. The Applicant testified that he had no present intention of launching a tort action against anyone. No evidence was presented of any actual election having been made by Mr. Falahi to pursue any other action. The only evidence of any intention by Mr. Falahi to make such an election was Mr. Baradaran's September 6, 2001 letter, noted above. There was no evidence that there had been any follow-up in that regard. On cross-examination, Mr. Falahi testified that he did not recall that letter, nor did he have, at that point, any "tort action or complaint." I accept the Applicant's evidence regarding any action or election.

The parties agree, the evidence supports, and I so find, that at least one prerequisite of the subsection 59(2) exception has not been met. Accordingly, I find that the subsection 59(2) exception is not available to Mr. Falahi.

Subsection 59(1) - the "entitlement to receive workers' compensation" provision

During its final submissions, the Insurer, for the first time, asked me to infer, for the purposes of subsection 59(1) of the Schedule, that Mr. Falahi was indeed entitled to WSIBs. ING then asked me to find, firstly, that Mr. Falahi, despite being entitled to WSIBs, had elected to bring an action as referred to in the WSIA, and secondly, that this action was made primarily for the purpose of claiming SABs. Accordingly, ING asked that I dismiss this arbitration proceeding.

I indicated two fundamental concerns with this submission.

My first concern was that of jurisdiction. I noted that the Insurer, itself, at the start of this hearing had noted the exclusive statutory jurisdiction of the Appeals Tribunal to deal with this issue. In response to this concern, the Insurer referred me to the Sofantzidelis decision, which held that the applicant in that case (claiming under the preceding 1994 Schedule³ which had identical wording to the provision presently in question) was entitled to receive benefits under the Workers' Compensation Act, as a result of a 1994 motor vehicle accident.

My second concern was the question of fairness and notice. The issue of entitlement is not set out anywhere as an issue to be dealt with in this preliminary issue hearing. Furthermore, both parties had indicated at the start of this hearing that this entitlement question was not an issue before me. The Insurer, however, stated that this question has been alive from the beginning of the no-fault claim and that any unfairness arising in this matter was due to the Applicant's alleged lack of timely production. The Insurer, as I understood it, further argued that there was a distinction between the determination of legal issues and the making of factual inferences.

In addition to copies of relevant legislation, the Insurer provided me with three cases. In two of these,⁴ the applicant had conceded entitlement to workers' compensation benefits and the issue was restricted to whether the exception applied. In Sofantzidelis, the question of the applicant's entitlement to workers' compensation benefits was specifically set out as a distinct issue for the arbitrator to decide. In her decision, the arbitrator stated that the issue of whether the applicant was entitled to such benefits was known "well in advance of the hearing." Adverse inferences of fact regarding the applicant's failure to produce certain documents assisted the arbitrator in determining what I find to be a legal issue concerning the applicant's entitlement to workers' compensation benefits.

A primary purpose of the pre-hearing discussion, as set out in Rule 33 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code"), is to identify and obtain agreement as to the issues for arbitration. The beginning of the hearing may be an opportunity to clarify and/or redefine the issues in dispute. In this case, some three hours were allotted, in significant part, to that purpose. Opening addresses should provide guide posts as to where the evidence and legal submissions fit. In the absence of any interim developments, for a party to maintain at the start of a hearing that something is not in issue before me, then to ask in final submissions, in effect, that I determine that issue for the purpose of entirely dismissing an application, does not advance the Commission's primary objectives of justice and fairness, on the one hand, and time and cost efficiency, on the other.

For these reasons alone, I am not prepared to decide an additional issue for which no notice, let alone adequate notice, was given.

In addition, I am of the view that I either do not have jurisdiction or that I should not exercise any jurisdiction I may have to determine the issue of Mr. Falahi's entitlement to workers' compensation benefits. Section 30 of the WSIA provides the Appeals Tribunal with exclusive jurisdiction to determine this issue. This provision is consistent with the principle of avoiding inconsistent results (with the possible consequence in this case that the Applicant might be found not to be entitled to claim benefits under either compensation scheme). Section 31 specifically allows an insurer from whom SABs are claimed (in addition to a party to an action) to apply to the Appeals Tribunal for such a determination. This provision is consistent with the first party insurer's onus to establish such entitlement. This tandem procedural provision also confirms that it is not for this Commission to decide this entitlement question. I note that these provisions came into force after Sofantzidelis was heard.

In the alternative, I note the comments in Administrative Law in Canada (Third Edition)⁵concerning overlapping jurisdiction:

Where neither tribunal has exclusive jurisdiction, the parties may choose their forum. However, if the issue is more central to the mandate of another tribunal who has expertise in the subject, the chosen tribunal may direct the parties to take the issue to the other tribunal.

Even if there were indeed overlapping jurisdiction between this Commission and the Appeals Tribunal in this regard, the parties do not agree that this forum should hear the issue of entitlement to workers' compensation benefits. Given that the issue is more central to the mandate of the Appeals Tribunal, in the unlikely possibility that I have any discretion in the matter, I would still direct the parties to take this issue to the Appeals Tribunal.

Hence, I find it appropriate to adjourn, sine die, the four-day entitlement hearing scheduled to commence Monday, April 15, 2002. The case administrator shall schedule an early resumption of the pre-hearing discussion for the purpose, amongst others, of setting time lines to allow an application to be made to the Appeals Tribunal for a determination of whether Mr. Falahi is entitled to workers' compensation benefits.

EXPENSES:

At the conclusion of submissions on the substantive preliminary hearing issues, I read from Rule 77 of the Code regarding communication of an Offer to Settle or a Response to an Offer to Settle. I was informed that a party wishes to have an Offer to Settle considered. Accordingly, I am hereby determining all issues in dispute in this preliminary issue hearing, except expenses.

Within ten days of the delivery of this decision, either party may file for my consideration any relevant Offer to Settle or Response to an Offer to Settle made in accordance with Rule 76 of the Code, should either party request an appointment before me to determine either entitlement to or the amount of expenses, in accordance with Rule 79.

February 5, 2002

Lawrence Blackman Arbitrator

Date