Neutral Citation: 2002 ONFSCDRS 46

FSCO A97-002106

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PIUS BONIFACE

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Joyce Miller

Heard:

On July 16, 2001 at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on October 9, 2001.

Appearances:

David S. Wilson for Mr. Boniface

Pamela Brownlee for Liberty Mutual Insurance Company

Background:

The Applicant, Pius Boniface, was injured in three motor vehicle accidents on June 30, 1995, April 12, 1996 and September 15, 1996. He applied for and received statutory accident benefits from Liberty Mutual Insurance Company ("Liberty Mutual"), payable under the Schedule.¹Liberty Mutual terminated weekly income replacement benefits on March 15, 1997. The parties were unable to resolve their disputes through mediation, and Mr. Boniface applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Boniface brought a motion pursuant to Rule 65 of the Dispute Resolution Practice Code (3rd Edition, April 15, 1997) for interim benefits to be paid to him pending the resolution of his dispute with Liberty Mutual.

The motion for interim benefits was held on April 6, 2000. On June 15, 2000, Arbitrator Killoran issued her decision wherein she ordered that Liberty Mutual shall pay Mr. Boniface interim benefits in the amount of $313.77 per week from March 16, 1997 ongoing plus interest on any outstanding income replacement benefits. The issues of a special award and arbitration expenses were reserved to the arbitrator hearing the merits of the application.

After this decision Liberty Mutual paid Mr. Boniface his arrears up to date, together with the appropriate interest, and reinstated his income replacement benefits. Liberty Mutual also paid Mr. Boniface a special award on this issue.

It was agreed by the parties in June 2000 that a loss of earning capacity benefit ("LECB") would be owed to Mr. Boniface on the basis that he continues to qualify for income replacement benefits 104 weeks after the onset of his disability.

Liberty Mutual requested that Mr. Boniface attend Insurer's medical examinations pursuant to section 65 of the Schedule to assess Mr. Boniface's residual earning capacity ("REC"), if any. Mr. Boniface refused to attend the assessments.⁴

In November 2000, Liberty Mutual undertook a pre-accident earning capacity ("PEC") review of Mr. Boniface's residual earning capacity.⁵

Based on the paper review, an LECB offer dated December 4, 2000 (amended December 6 and 11, 2000) was made. This offer reflected a pre-accident earning capacity of $37,366.96 and a residual earning capacity of $391.17 per week. This resulted in a loss of earning capacity benefit offer of $103.98 per week.

This loss of earning capacity benefit offer was rejected by Mr. Boniface.

At the time Liberty Mutual made the LECB offer in December 2000, it was learned that Mr. Boniface had not informed Liberty Mutual of earnings from self-employment while delivering newspapers for The Toronto Star. As a result, this gave rise to a new figure for Mr. Boniface's gross income from employment in the 156-week period prior to the first accident in the amount of $93,909.34. This resulted in an income replacement benefit of $443.33 per week. Arrears were paid and this figure was used to calculate Mr. Boniface's pre-accident earning capacity.

The parties agreed in December 2000 that Mr. Boniface's pre-accident earning capacity would be based on the period between June 30, 1992 and June 30, 1993 which represented his best 52-week consecutive weeks in the 156-weeks prior to the accident. This gave rise to a pre-accident earning capacity of $47,941.98.

Liberty Mutual amended the amount of its loss of earning capacity benefit offer. As Mr. Boniface had rejected the original loss of earning capacity benefit, he was required to undergo a residual earning capacity DAC assessment.

A report of the DAC assessment dated March 20, 2001 determined that Mr. Boniface's residual earning capacity was zero on the basis of an ongoing psychological disability.

As a result of this assessment, Mr. Boniface has been receiving a loss of earning capacity benefit of $560.55 per week from April 12, 2001 and ongoing. This loss of earning capacity benefit is related to his accident of June 30, 1995.

The issues in this arbitration hearing are:

1. Is Mr. Boniface entitled to receive an income replacement benefit as a result of the April 12, 1996 and/or September 15, 1996 accidents?

2. Is Mr. Boniface entitled to a loss of earning capacity benefit offer pursuant to section 20 of the Schedule with respect to either or both of the April 12, 1996 and September 15, 1996 accidents, an offer having been made with respect to the June 30, 1995 accident?

3. From what date is the LECB currently being paid to Mr. Boniface payable?

4. Is Mr. Boniface entitled to a special award pursuant to subsection 282(10) of the Insurance Act?

5. Is either party entitled to their expenses in respect of ths arbitration pursuant to subsection 282(11) of the Insurance Act.

Result:

1. Mr. Boniface is not entitled to receive income replacement benefits as a result of the April 12, 1996 and September 15, 1996 accidents.

2. Mr. Boniface is not entitled to a loss of earning capacity benefit offer pursuant to section 20 of the Schedule with respect to either the April 12, 1996 or September 15, 1996 accidents.

3. The date from which Mr. Boniface is entitled to be paid his LECB is April 12, 2001.

4. Mr. Boniface is not entitled to a special award.

5. Mr. Boniface is entitled to his expenses in this arbitration proceeding.

EVIDENCE:

Issue 1 Is Mr. Boniface entitled to receive income replacement benefits as a result of the April 12, 1996 and/or September 15, 1996 accidents?

1. April 12, 1996, the Second Accident

At the time of Mr. Boniface's second accident, the evidence shows that he was substantially disabled from performing the essential tasks of his employment as a result of his first accident on June 30, 1995 and was receiving an income replacement benefit from Liberty Mutual.

Mr. Boniface's injuries after the first accident are outlined in the Health Practitioner's Certificate from Mr. Boniface's family physician, Dr. R. Beharry, dated July 7, 1995, where he states that Mr. Boniface's "physical and mental findings/limitations/restrictions" to be "lower back pain, upper back pain and headaches."

A further Health Practitioner's Certificate dated December 18, 1995 submitted by Dr. Beharry states that Mr. Boniface's "physical and mental findings/limitations/restrictions" to be "lower back pain, neck and right shoulder pain and headaches."

In another Health Practitioner's Certificate dated January 12, 1996, Dr. Beharry notes that Mr. Boniface is suffering from "lower back pain and upper back pain."

A report dated February 5, 1996 from Jefferson Rehabilitation Centre, where Mr. Boniface underwent a Functional Capacity Evaluation (FCE), states under the heading "Subjective Testing" that Mr. Boniface reported difficult walking for durations longer than 15 minutes, he had difficulty climbing stairs, standing, sitting and driving for more than one hour. He had pain and discomfort from lifting a laundry basket and had difficulties in the areas of laundry, cooking, vacuuming, reaching overhead and some increased pain while dressing.

On March 11, 1996, one month before the second accident, Mr. Boniface underwent a medical/rehabilitation DAC assessment with Dr. C. Stants, a chiropractor, and Dr. G.M. Sawa, a neurologist. In Dr. Stants' report he states that Mr. Boniface had severe pain. He had pain with washing and dressing, he was unable to walk more than half a kilometre, or to sit or stand for more than half an hour. He had difficulty sleeping and was restricted in his social life due to pain.

Mr. Boniface testified that at the time of the second accident there was no significant improvement in his condition as a result of the first accident. He stated that he had symptoms every day and that his condition by the time of the second accident was the same as he had reported to the DAC assessor.

The second accident occurred on April 12, 1996. Mr. Boniface testified that he was waiting for a parking spot in a parking lot when someone reversed their car and hit both of the passenger side doors. He stated that his vehicle was stopped and that the impact was medium. He stated that he was wearing a seat belt and that he did not move much on impact. He testified that after the accident he felt his pain was aggravated. Mr. Boniface stated that he had lots of pain and his movement was solely restricted that he could not move at all after the second accident. He stated that his headaches got more severe and were more frequent.

Under cross-examination, he stated that there was very little change in his pain between the first and second accidents. He stated that he had no new pain as a result of the second accident.

Mr. Boniface testified that several months after the second accident he began complaining to his family doctor that he was suffering from depression, memory and concentration problems. Dr. Beharry referred him to a psychotherapist, Dr. Janice Walcott, on July 16, 1996, for evaluation and treatment.

Mr. Boniface testified that between the second accident and the third accident on September 15, 1996, there was no significant improvement in his condition.

2. September 15, 1996, the Third Accident

The third accident occurred when Mr. Boniface was stopped at a red light preparing to make a right turn. He stated that he was rear-ended and that this was a heavy collision. He stated that on impact his body went back and forth. He was not sure if he hit his head on the steering wheel.

Mr. Boniface testified that immediately after the accident he felt very nervous and was hurting a lot. He stated that he went to a walk-in clinic. He stated that he had increased back, right shoulder and neck pain. He stated that his neck was so tight he could not move it. As well, he stated that his emotional, memory and concentration problems got worse after the September 15, 1996 accident. He stated that his sleep was more disturbed and that he was depressed most of the time.

With respect to the third motor vehicle accident, Dr. Beharry submitted a Health Practitioner's Certificate dated October 8, 1996. In this report, he noted that the physical and mental findings and limitations/restrictions to be "pain in neck and right shoulder, pain in lower back and headaches."

Mr. Boniface testified that after the third accident, some time in 1997, he developed urinary incontinence. Dr. Beharry referred Mr. Boniface to a urologist, Dr. Shaikh. Dr. Shaikh then referred him to Dr. Radomski, urologist. On July 17, 1997, Dr. Radomski reported that in his view Mr. Boniface's condition was "most likely related to his back trauma from his car accidents."

Liberty Mutual referred Mr. Boniface to Dr. H. Schutz, a neurosurgeon, for their own assessment of his urinary incontinence condition. In a report of February 2, 1998, Dr. Schutz stated:

The suggestion that this patient's incontinence is in any way related to the motor vehicle accident is speculative. Apparently he has had an MRI scan only ten days ago, and the results of it would be of interest in terms of this evaluation. The fact that he has excellent peri-anal sensation, the fact that he has the ability to obtain and maintain an erection, and the fact that he has no bowel incontinence makes the suggestion that he has an organic structural problem in the lumbar spine untenable.

To reiterate, I do not believe that Mr. Boniface's present complaints of urinary incontinence are related to soft tissue injuries which he sustained in the motor vehicle accident of September 15, 1996. Furthermore, the incontinence is not related to the series of three motor vehicle accidents which occurred in June 1995, April 1996, and September 1996.

Dr. Schutz provided an addendum to his report on June 25, 1999. At this time, Dr. Schutz had an opportunity to review the additional notes of Dr. Radomski, x-rays and the MRI results. In his report of June 25, 1999, Dr. Schutz indicated that his views had not changed and remained as they were on February 2, 1998.

At the suggestion of Dr. Radomski, Mr. Boniface was also assessed by a neurosurgeon, Dr. M. Fehlings. In his report of April 21, 1998, Dr. Fehlings stated that "in light of this patient's presentation and x-ray findings, we do not find significant findings on the MRI that could explain this patient's clinical presentation.

At the recommendations of Dr. Fehlings, Mr. Boniface had further diagnostic tests conducted by Dr. Ashby, a neurologist. On August 11, 1998, Dr. Fehlings provided a further report in this regard. He stated:

In summary, Dr. Ashby felt that Mr. Boniface's neurological exam was essentially normal with some mild giveway problem. There was no EMG evidence of a focal neurogenic or myopathic weakness. The MRI scan of the thoracic spine was normal which was reassuring to rule out a significant lesion of the upper thoracic cord.

In summary, I could find no structural anomalies or definite neurologic changes to account for this man's bladder symptoms.

On February 11, 2000, Mr. Boniface attended on his behalf a medical legal assessment by Dr. B.S. Kirsh, pain medicine specialist and psychiatrist. In his report dated March 6, 2000, Dr. Kirsh deals with the issue of causation. With respect to the first motor vehicle accident of June 30, 1995, Dr. Kirsh states that this accident "played a material role" in Mr. Boniface's present condition. With respect to the second motor vehicle accident of April 12, 1996, Dr. Kirsh stated:

This appeared to be a minor collision. The patient only felt that his condition was "aggravated" but overall his symptoms stayed the same. It would seem that this accident did not contribute to his present state.

With respect to the third accident of September 15, 1996, Dr. Kirsh stated:

The patient believes that this accident was the worst of all three. Besides exacerbation of his physical symptoms, he was more emotionally traumatized. He was predisposed prior to this accident to have a more catastrophic reaction and had this accident not occurred, he might have been better than he is today. Having said that, the same psychological factors have been operating through all the accidents and, most likely, the pattern of disability was set after the first one. In other words, while this accident appeared to be traumatic to the patient, it is my opinion that it is unlikely he would be better today had it not happened.

Succinctly, Dr. Kirsh's opinion is that neither the second nor the third accidents materially contributed to Mr. Boniface's present condition. In his report, Dr. Kirsh stated as follows:

I believe that Mr. Boniface cannot function properly to hold down any kind of employment, even one that is light, sedentary as he is overwhelmed by his Pain Disorder. This disability has been present continuously from the accident of June 30, 1995 and continues to the present. [emphasis added]

I received a number of reports on behalf of Mr. Boniface from medical practitioners which include: Dr. Janice Walcott, Dr. M. Mamelak, Dr. R. Miller, Dr. A. Kaminska. All of these medical practitioners either treated Mr. Boniface and/or conducted assessments on his behalf with respect to his psychological disability. All of these medical practitioners concluded that Mr. Boniface was substantially disabled from performing the essential tasks of his employment. Unlike Dr. Kirsh's report they do not clearly state whether the first, second and/or third accidents caused Mr. Boniface's disability.

Submissions:

It is Mr. Boniface's position that after the June 30, 1995 accident, one or both of the subsequent accidents substantially disabled him from performing the essential tasks of his employment pursuant to section 7(1) of the Schedule.

Liberty Mutual's position is that the subsequent accidents merely aggravated Mr. Boniface's condition, but did not substantially disable him. It is Liberty Mutual's position that it continue to pay Mr. Boniface his income replacement benefit throughout any period of his disability on the basis of the first motor vehicle accident on June 30, 1995.

Analysis and Findings:

The burden of proof rests with Mr. Boniface to show on a balance of probability that the second and/or third accidents substantially disabled him from performing the essential tasks of his employment, as an injection moulding machine operator. For the following reasons I find Mr. Boniface has not discharged his burden.

It is a settled rule of law that a motor vehicle accident need not be the sole cause of an insured's disability. It has been consistently held by arbitrators that it is sufficient that the accident made a material or significant contribution to the insured's disability.

It is clear from the medical evidence and Mr. Boniface's testimony that at the time of the second accident he was substantially disabled from performing the essential tasks of his pre-accident employment as well as his daily activities. The second accident was a minor accident which exacerbated the chronic pain condition which he had developed. Although Mr. Boniface developed depression and increased sleep disorder after the second accident, there is nothing in the medical evidence to show that this was a significant and material addition to his debilitating chronic pain disorder as a result of the first accident.

Prior to the third accident, there was no significant change in Mr. Boniface's condition. After the third accident, his complaints as articulated by Dr. Beharry in the Health Practitioner's Certificate dated October 8, 1996 under the heading of "physical and mental findings and limitatations/restrictions," were the same as they were for the first and second accidents, namely, "pain in neck and right shoulder, pain in lower back and headaches." While this accident may have exacerbated Mr. Boniface's condition, I do not find that the evidence substantiates that this accident resulted in a material or significant contribution to his disability.

With respect to the development of Mr. Boniface's urinary incontinence in 1997, I find that Dr. Radomski's opinion that this condition is most likely related to his back trauma from his car accidents to be rather vague. The burden of proof rests with Mr. Boniface to show that the urinary incontinence is a result of either one of his car accidents. Dr. Radomski's speculation that it may be as a result of the car accident and Drs. Fehlings' and Ashby's inability to account for this symptom in my view is not sufficient to discharge this burden.

Accordingly, for all of these reasons, I find that Mr. Boniface has not discharged his burden of proof that he was substantially disabled as a result of the April 12, 1996 and/or September 15, 1996 car accidents pursuant to section 7(1) of the Schedule.

Although I have concluded that Mr. Boniface is not entitled to income replacement benefits for the subsequent accidents of April 12, 1996 and September 15, 1996, for the sake of completeness I will deal with the second issue of whether Mr. Boniface would be entitled to more than one LECB offer.

Issue 2 Is Mr. Boniface entitled to a loss of earning capacity offer pursuant to Section 20 of the Schedule with respect to either the April 12, 1996 or September 15, 1996 accidents?

The Law

The following sections are relevant to the discussion on this issue.

Subsection 20(1) of the Schedule provides that:

An insurer shall pay an insured person weekly loss of earning capacity benefits instead of weekly income replacement benefits under Part II, weekly education disability benefits under section 15, weekly caregiver benefits under Part IV or weekly disability benefits under Part V if the payment of loss of earning capacity benefits is authorized by this Part.

Subsection 21(1) of the Schedule provides in part that:

Subject to subsections (7) to (9), an insurer offer shall promptly deliver a written offer to an insured person with respect to the payment of weekly loss of earning capacity benefits if one or more of the following circumstances occurs:

1. The insured person qualified for weekly income replacement benefits under Part II and continues to qualify for those benefits 104 weeks after the onset of the disability in respect of which he or she first qualified for those benefits.

Subsection 21(9) of the Schedule provides that:

If an insured person suffers an impairment as a result of an accident that occurs after the accident in respect of which an offer would, in the absence of this subsection, be given under subsection (1), and the latter accident results in a disability in respect of which weekly benefits are payable under Part II, section 15, Part IV or Part V, the operation of subsection (1) is delayed until 104 weeks after the latter accident.

Submissions:

Mr. Boniface's Submissions

Mr. Boniface submits that if income replacement benefits are owed to him as result of either one or both of the subsequent accidents, he is entitled to one or two additional section 21 loss of earning capacity benefit offers.

Mr. Boniface submits that the criteria as described in the Schedule for the delivery of an LECB offer will have been met once it is found, with respect to each of the subsequent accidents, that an insured person qualified for weekly income replacement benefits and continues to qualify for them 104 weeks after the date of each accident.

Mr. Boniface submits that such a finding involves neither a difficult exercise in the interpretation of the Schedule nor any analysis of the purpose of any particular section. Rather, the simplicity of the words themselves result in the requirement that there be the prompt delivery of an offer once the two conditions exist.

Mr. Boniface submits that unless there is an ambiguity in the regulation, it is not open for the arbitrator to provide her own interpretation as to what was intended by legislators. Mr. Boniface submits that the clear words of the statute must be followed even though they may lead to an absurdity.

Mr. Boniface submits that I should ignore Liberty Mutual's submission that if his view prevails he would be unjustly enriched by receiving up to 300 percent of his original loss, that is, triple his pre-accident income. Mr. Boniface submits that this is not his intention. He concedes that if he is entitled to an LECB offer for each subsequent accident, he accepts that the amount of the benefits may be zero. Nevertheless, Mr. Boniface submits, the issue to be determined is not the amount of the LECB but whether pursuant to subsections 21(1) and (9) an insured is entitled to an LECB offer for each subsequent accident where he meets the test at 104 weeks after the date of each accident.

Mr. Boniface submits that subsection 21(9) deals with the timing of an LECB offer and says nothing about the entitlement to such an offer. That is, the effectiveness of this subsection is simply to delay the "operation" of the making of the offer.

Mr. Boniface submits that unlike his case where one insurer is responsible for all three accidents, there may be cases where each subsequent accident has a separate insurer. It follows from this that each insurer would be required to make a separate LECB offer for each accident.

Mr. Boniface submits that the amount of an insured's LECB benefits may be affected by sections 32 and 34 of the Schedule if he or she were not entitled to a separate LECB offer for each subsequent accident. These sections deal with the situation where there has been a temporary or permanent deterioration in the impairment of an insured who has been receiving an LECB benefit and as a result the insured may be entitled to an increase in the amount of his or her LECB benefit.

Specifically, Mr. Boniface submits that if a few years after an insured has been collecting an LECB for the first accident it turns out that his or her problem stems from the second accident, if the insured has not received an LECB offer for the second accident he or she would therefore not be entitled to an LECB benefit for the impairment that resulted from the second accident.

Mr. Boniface submits that while in the end the additional LECB offer may be "nil," nevertheless, it is important that where there are multiple accidents that an insured should be entitled to receive an LECB offer for each of the accidents where the insured qualified for one after 104 weeks.

Liberty Mutual's Submissions

Liberty Mutual submits that it is consistent with both the plain language and overall structure of the Schedule that Mr. Boniface is entitled to only one LECB offer, even if his disability arises from a series of accidents. In support of this proposition Liberty Mutual relies on subsection 21(1) and subsection 21(9) of the Schedule.

Subsection 21(1) provides, in part, that subject to subsection 21(9) an insurer shall promptly deliver a written LECB offer to the insured where the insured continues to qualify for weekly income replacement benefits 104 weeks after the "onset of the disability" in respect of which he or she first qualified for those benefits.

Liberty Mutual submits that it is crucial to note that in this section, the accident itself ceases to be the focus and the focus becomes "disability." It is not any one or a number of accidents which gives rise to an LECB offer, but the disability itself. Succinctly, the presence of the qualifying disability gives rise to the LECB offer.

Subsection 21(9) states that, if there is a motor vehicle accident which, but for this subsection, would result in entitlement to an LECB offer to be made pursuant to subsection 21(1) and a subsequent accident occurs, the making of the LECB offer is delayed until 104 weeks after the latter accident.

Succinctly, Liberty Mutual submits that subsection 21(9) serves to delay making an LECB offer pursuant to subsection 21(1) where subsequent accidents occurred.

Liberty Mutual submits the effect of subsection 21(9) is that it does not matter how many accidents an insured was involved in so long as each of the accidents materially contributed to or gave rise to the qualifying disability. The overall disability would in turn result in entitlement to one LECB offer.

Liberty Mutual submits it is well-established that the Schedule intended to reduce if not eliminate the opportunity for double recovery. For example:

• subsection 61(1) of the Schedule specifically states that no more than one weekly benefit shall be paid to an insured person under this Regulation for the same period of time;

• section 31 of the Schedule specifically indicates that no weekly income replacement benefits are payable to a person under Part II after the LECB begins to be paid to the person under Part IV. Liberty Mutual points out that under the scenario suggested by Mr. Boniface, there would be a possibility that an insured would be entitled to receive both income replacement benefits and an LECB at the same time;

• section 75 of the Schedule, which deals with deductions for collateral benefits as well as the sections on deductions for post accident income and the election sections, are further examples of the Legislature's intention to avoid double recovery under the Schedule.

Liberty Mutual submits that subsection 21(9) is clear in its language and intent. It was included for the express purpose of limiting an insured's entitlement to multiple LECB offers when involved in a succession of accidents and to eliminate double recovery.

Liberty Mutual submits that to accept Mr. Boniface's interpretation of the legislation is to give no effect to subsection 21(9) and to allow an insured to recover what may be up to 300 percent of his original loss or triple his pre-accident income.

Liberty Mutual submits that the principles of statutory construction do not allow for the result urged by Mr. Boniface in his submissions where he states that the clear words of the statute may lead to an absurdity. Liberty Mutual submits it has been commonly accepted that where it appears the consequences of adopting an interpretation would lead to an absurdity, the Courts are entitled to reject it in favour of a plausible alternative that avoids the absurdity.

In support of its submission Liberty Mutual relies on the case of Waugh vs. Pedneault² where Mr. Justice O'Halloran stated:

The Legislature cannot be presumed to act unreasonably or unjustly, for that would be acting against the public interest. The members of the Legislature are elected by the people to protect the public interest and that means acting fairly and j ustly in all circumstances. Words used in enactments of the Legislature must be construed upon that premise. That is the real "intent" of the Legislature. That is why words in an Act of the Legislature are not restricted to what are sometimes called their "ordinary" or "literal" meaning but are extended flexibly to include the most reasonable meaning which can be extracted from the purpose and object of what is sought to be accomplished by the statute.

As well, Liberty Mutual relies on the proposition as stated in Driedger on the Construction of Statutes (Third Edition, 1994).³ These are:

• It is presumed that legislation is not intended to produce absurd consequences

• Absurdity is not limited to logical contradictions and internal incoherence; it includes violations of justice, reasonableness, common sense and other public standards. Also, absurdity is not limited to what is shocking or unthinkable; it may include any consequences that are judged to be undesirable because they contradict values or principles that are considered important by the courts.

• Where the words of a legislative text allow for more than one interpretation, avoiding absurd consequences is a good reason to prefer one interpretation over the other. Even where the words are clear, the ordinary meaning may be rejected if it would lead to an absurdity.

• The more compelling the reasons for avoiding absurdity, the greater the departure from ordinary meaning that may be tolerated. However, the interpretation that is adopted should be plausible.

Liberty Mutual submits that Mr. Boniface's submission with respect to there being three accidents and three separate insurers is a hypothetical situation and is not of concern to the facts that are in this arbitration. Liberty Mutual submits that in any case it is more likely than not that if more than one accident contributed to an insured's impairment then an offer would be made and the resulting benefits, if any, would be split between the insurers. Liberty Mutual submits this is a more plausible result than an insured recovering double or triple his original loss.

Liberty Mutual submits that Mr. Boniface's submissions with respect to sections 32 and 34 are not relevant to the issue of whether he is entitled to more than one LECB offer. These sections, Liberty Mutual submits, deal with the entitlement to additional benefits once a person is in receipt of an LECB offer.

Findings:

After a careful review of the submissions I agree with the analysis and conclusion presented by Liberty Mutual.

I find it significant that the wording in paragraph 21(1)1. does not refer to "accident" but to the term "after the onset of the disability" as one of the criteria for when an insurer must make an LECB offer. I agree with Liberty Mutual's submission that subsection 21(9) serves to delay the making of an LECB offer pursuant to subsection 21(1) where subsequent accidents have occurred. That is, the effect of subsection 21(9) is that it does not matter how many accidents an insured was involved in so long as each of the accidents materially contributed to or gave rise to the qualifying disability, the overall disability would in turn result in entitlement to one LECB offer.

On the facts of this case, had I, for example, found that Mr. Boniface was substantially disabled from performing the essential tasks of his employment as a result of the first and third accidents then, pursuant to subsections 21(1) and (9), his LECB offer would be delayed to 104 weeks after the third accident.

I must note, however, subsection 21(9) does not necessarily preclude an insured from being entitled to more than one LECB offer in certain circumstances. For example, where an insured is receiving an LECB from a previous car accident and then becomes involved in a second accident; in that case, sections 7 and 21, where appropriate, would apply and the insured person may be entitled to an LECB offer for that second accident.

Accordingly, for these reasons I find that Mr. Boniface is not entitled to a loss of earning capacity benefit offer, pursuant to section 20 of the Schedule, with respect to either the April 12, 1996 or September 15, 1996 accidents.

Issue 3 From what date is the LECB currently being paid to Mr. Boniface payable?

As noted above, Mr. Boniface's income replacement benefits were terminated in March 1997 approximately three months before he would have been entitled to an LECB offer if he met the criteria of section 21 of the Schedule. Mr. Boniface disputed the termination of his income replacement benefits. In June 2000, Mr. Boniface was awarded interim benefits. After this arbitration decision Liberty Mutual paid Mr. Boniface his arrears including interest and reinstated Mr. Boniface's income replacement benefits. As well, Liberty Mutual paid a certain amount towards a special award.

In June 2000 the parties agreed that Mr. Boniface was entitled to an LECB offer. Liberty Mutual states that it attempted to arrange an insurer's examination pursuant to section 65 of the Schedule to assess Mr. Boniface's residual earning capacity. Mr. Boniface refused to attend the assessments.⁴ Liberty Mutual states that as a result it was required to undertake a paper review of Mr. Boniface's residual earning capacity.⁵

On December 4, 2000, Liberty Mutual made an LECB offer to Mr. Boniface. This offer was rejected. Pursuant to section 23 of the Schedule Mr. Boniface attended a residual earning capacity DAC assessment. In a report dated March 30, 2001, the DAC assessors determined that Mr. Boniface's residual earning capacity was zero on the basis of an ongoing psychological disability.

It was determined that Mr. Boniface's LECB was $560.55 per week. This amount is higher than the $443.30 that Mr. Boniface was paid for his income replacement benefits.

Mr. Boniface began to receive his LECB April 12, 2001.

The parties agreed that the usual delay between the making of the LECB offer and the date of the commencement of the LECB where the insured has disputed the amount of the offer with respect to the residual earning capacity is a four-month period.

Submissions:

Mr. Boniface's Submissions

Mr. Boniface submits he should have been entitled to an LECB offer either on June 30, 1997 or no later than October 30, 1997 rather than April 2001. Mr. Boniface submits that if Liberty Mutual's position prevails, namely that Mr. Boniface's LECB should be paid from April 2001, then Mr. Boniface would be deprived of receiving a higher benefit for a considerable period of time. Mr. Boniface submits that the Insurer should not be rewarded for unconscionable conduct, and that its present position is itself unconscionable and accordingly, entirely unreasonable.

Mr. Boniface submits that it was Liberty Mutual's inappropriate conduct by refusing to acknowledge Mr. Boniface's disability until June 2000 which resulted in the LECB offer being considerably delayed. Mr. Boniface submits Liberty Mutual should not be entitled to take advantage of that delay.

Liberty Mutual's Submissions

Liberty Mutual submits that it did not purposely delay making the offer so as to reduce its exposure. It was not until the issue regarding entitlement to income replacement benefits was resolved in June 2000 that the obligation to make the LECB offer was established.

Liberty Mutual submits that it already paid the price for the termination of benefits in March 1997 which was deemed to be improper. Income replacement benefits were paid retroactive to the termination date, together with interest and a special award.

Liberty Mutual submits that arbitrators have interpreted subsections 23(5) and 23(5.1) to require an insurer to pay income replacement benefits unless and until it elected to pay an LECB. Liberty Mutual submits that this interpretation punishes the insurer as the average LECB is usually less than an insured's income replacement benefits.

Liberty Mutual submits that an insurer would, in the normal course, prefer to have the option of paying an LECB earlier than later. Liberty Mutual submits that if Mr. Boniface's LECB was less than his income replacement benefits, then pursuant to the present case law⁶ Liberty Mutual would not be able to argue that it is entitled to a repayment for the difference from June 1997 to April 2001. To say in this case that the LECB offer should have to be made retroactive to June 1997 is to say that the legislation should always be interpreted to the benefit of the insured notwithstanding the circumstances.

The Law

The following sections are relevant to the discussion on this issue.

Subsection 21(1) of the Schedule provides in part that:

Subject to subsections (7) to (9), an insurer offer shall promptly deliver a written offer to an insured person with respect to the payment of weekly loss of earning capacity benefits if one or more of the following circumstances occurs:

9. The insured person qualified for weekly income replacement benefits under Part II and continues to qualify for those benefits 104 weeks after the onset of the disability in respect of which he or she first qualified for those benefits.

Subsection 23 (5) of the Schedule provides that:

Subject to subsection (8), if an insured person rejects the insurer's offer in respect of residual earning capacity or both residual earning capacity and pre-accident earning capacity, the insurer may commence paying weekly loss of earning capacity benefits to the insured person 14 days after receiving the report from the designated assessment centre under subsection 27 (5).

Subsection 23 (5.1) of the Schedule provides that:

(5.1) The benefits paid under subsection (5) shall be based on,

(a) the insurer's offer made under section 21, in respect of the insured person's pre-accident earning capacity; and

(b) the determination made by the designated assessment centre of the insured person's gross annual income, in respect of the person's residual earning capacity.

Analysis and Findings

The issue I have to decide is from what date is the LECB currently being paid to Mr. Boniface payable.

For the following reasons I find that the commencement of Mr. Boniface's loss of earning capacity benefit is not retroactive to either June 30, 1997 or October 1997 and that the correct date is April 12, 2001.

Directors's Delegate Naylor, in interpreting section 23 and in particular subsections 23(5) and (5.1), in the case of Gan Canada Insurance Company and Rocca⁷held that where there is a dispute regarding an insured's entitlement to income replacement benefits, there is no obligation on the insurer to make an LECB offer. Pending the resolution of the entitlement issue, the insurer is required to continue paying income replacement benefits. Director's Delegate Naylor also stated in her conclusion:

... I find that subsection 23(5) does not evidence an intent to relieve an insurer from paying IRBs after it has made an offer pursuant to be section 21 and that offer has been refused. I also concluded that subsection 23(5), and the amendments giving effect to it, but not intended to allow an insured the discretion to pay a LECBs based on its own assessment of residual earning capacity, in the face of a REC-DAC determination. Rather the changes were intended to permit the insurer, pending resolution of the dispute, to replace IRBs with LECBs based on the insurer's offer of pre-accident earning capacity and the REC-DAC determination of residual earning capacity.

Applying the reasoning in the Gan case, I find that Liberty Mutual cannot be faulted for any delay in making its LECB offer. I find that Liberty Mutual was not obligated to making an LECB offer until the dispute over the entitlement to income replacement benefits was resolved. Mr. Boniface's entitlement to income replacement benefits was not resolved until June 2000. At that time Liberty Mutual paid income replacement benefits retroactive to the termination date, together with interest and a special award.

I do not find that Liberty Mutual deliberately or unreasonably delayed the making of the LECB offer once it agreed to make the offer in June 2000. Mr. Boniface refused Liberty Mutual's requests to attend an insurer's medical examination pursuant to section 65 of the Schedule to assess his residual earning capacity. This was his choice. Liberty Mutual was then required to undertake a paper review to arrive at his LECB offer. This was done by early December 2000. In my view, this was not an unreasonably long period of time.

I agree with Liberty Mutual's submission that while the period of time between the 104-week mark and the issuance of the REC-DAC was unusually long, this was the result of the unique circumstances of this case.

Accordingly, for these reasons I find that Mr. Boniface's LECB is payable by April 12, 2001.

SPECIAL AWARD:

Pursuant to subsection 282(10) of the Insurance Act⁸ an arbitrator must grant a special award, up to 50 percent of the benefit awarded, plus interest, once he or she finds that an insurer has acted unreasonably in withholding or delaying payment. In Plowright and Wellington Insurance Company⁹ Arbitrator Palmer made the following comments, which I agree with, on what can be considered to be unreasonable behaviour on the part of an insurer:

"Unreasonable" behaviour by an Insurer in withholding or delaying payments can be seen as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.

A special award is based on the amounts to which the Applicant is entitled at the time of the award. Since I have concluded that Mr. Boniface is not entitled to any additional benefits, he would therefore not be entitled to a special award. However, if I am wrong in my conclusion for the sake of completeness, I will deal with this issue.

Submissions:

Mr. Boniface's Submissions

Mr. Boniface submits that as a result of the significant difference between the amount of his LECB and his income replacement benefits substantial arrears are owed to him. Mr. Boniface submits that for the reasons previously stated in the discussion under the substantial issues, it is his position that the Insurer has been entirely unreasonable and that he is entitled to a 50 percent special award.

Liberty Mutual's Submissions

Liberty Mutual submits that its conduct with respect to this matter is not such as would give rise to a special award.

Liberty Mutual submits that the issues in dispute in this matter arise over novel legal interpretations of the Schedule which have not been considered by the Commission in any previous decision. These issues deal with, namely, the provision of multiple loss of earning capacity benefit offers and the issue when a loss of earning capacity benefits would be found owing to under the circumstances. Liberty Mutual submits that the case law¹⁰ supports the proposition that, where a denial of benefits is based upon a reasonable and legitimate dispute regarding the proper construction of a legislative provision and its application in the circumstances of the case, the insurer will not be held to have unreasonably withheld or delayed payments.

Finding:

I do not find that Liberty Mutual has unreasonably withheld or delayed payments with respect to the payment of Mr. Boniface's LECB. I find that the case law¹¹supports Liberty Mutual's position that where a denial of benefits is based upon a reasonable and legitimate dispute regarding the proper construction of a legislative provision that the insurer should not be found to have unreasonably withheld or delayed payments. I agree with this case law and I find that the reasoning is applicable to the facts in this case.

Accordingly, I find that Mr. Boniface is not entitled a special award pursuant to subsection 282 10) of the Schedule.

EXPENSES

Both Mr. Boniface and Liberty Mutual request their expenses in this arbitration.

The Law

Subsection 282(11) of the Insurance Act provides:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum sets in the regulations.

Subsection 12 (2) of the Expense Regulation¹² provides:

(2) an arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

1. Each party's degree of success in the outcome of proceeding.

2. Conduct of the insurer or the insured person to that tended to shorten or facilitate the proceeding, or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.

3. Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

5. If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award expenses is justified.

Findings

The case law is clear, awarding expenses at arbitration is not based on the results approach of the courts, but is based on the underlying purpose of the statutory accident benefit scheme, namely, to facilitate access to inexpensive, speedy and informal adjudication of disputes.¹³ The degree of success in the outcome of an arbitration proceeding is only one of a number of criteria that an arbitrator takes into consideration when exercising his or her discretion to award expenses to a party. Other matters to be considered are the conduct of the parties, the degree of complexity and, novelty of the issues raised, settlement offers, as well as any other matter related to the proceeding that an arbitrator considers relevant to the issue of awarding expenses.

Applying the criteria outlined above, for the following reasons I find that Mr. Boniface is entitled to his reasonable expenses in this arbitration proceeding and Liberty Mutual is not.

Although Mr. Boniface was not successful in this arbitration I, nevertheless, find that Mr. Boniface had legitimate claims to dispute that entitled him to apply for arbitration. Mr. Boniface raised novel issues that involved complicated legislation that had not been considered in previous decisions. Mr. Boniface presented his case in a timely manner and did not unnecessarily prolong the proceedings. As well, issues that could have been settled were settled prior to the arbitration.

Accordingly, for these reasons, I find that Mr. Boniface is entitled to his expenses in this arbitration proceeding pursuant to subsection 282(11) of the Insurance Act.

March 12, 2002

Joyce Miller

Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 46

FSCO A97-002106

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PIUS BONIFACE

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Liberty Mutual shall pay Mr. Boniface a loss of earning capacity benefit from April 12, 2001.

2. Liberty Mutual shall pay Mr. Boniface his expenses in regards to this arbitration proceeding.

March 12, 2002

Joyce Miller

Arbitrator

Date

If the arbitrator finds that an insurer has unreasonably withheld or delayed payment, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 percent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 4Exhibit 2, Tab 51
3. 5Exhibit 2 tab 42
4. 21948 CanLII 474 (BC CA), [1949] 1 W.W.R. 14, at 15 (B.C.C.A.)
5. 3At pp 84 and following
6. 6See Rocca and Gan Canada Insurance Company (FSCO A97-000147, December 31, 1998), appeal decision (FSCO P99-00003, July 20, 1999); Blake and Jevco Insurance Company (FSCO A98-000102, March 22, 2000).
7. 7Supra Footnote 6
8. 8Subsection 282(10) provides that:
9. 9(OIC A-003985, October 29, 1993)
10. 10See Hui and Security National Insurance Company (OIC A-000055, November 15, 1991); McDonald and State Farm Insurance Companies (OIC A-001347, March 11, 1993) and Baker and Non-Marine Underwriters, Mbrs. Of Lloyd's (OIC A95-000292, August 15, 1997)
11. 11Ibid.
12. 12Ontario Regulation 464/96 enacted on November 1, 1996
13. 13See for example: McCormick and Economical Mutual Insurance (OIC A-000139, October 2, 1991); Calogero and The Co-operators General Insurance Company, (OIC P-000251, February 13, 1992); Allison and Markel Insurance Company of Canada, (OIC P-001231, August 21, 1996); Biliouras and Allstate Insurance Company of Canada, (FSCO P98-00002, October 13, 1998); Athanasiadis and Zurich Insurance Company (FSCO A 97-001239, December 23, 1999); Gray and Zurich Insurance Company, (FSCO P-98-00047, June 11, 1999); and Morelli and Zurich Insurance Company (FSCO A97-001997, June 27, 2000.