Delores Corcoran v. Certas Direct Insurance Company, 2002 ONFSCDRS 95

Neutral Citation: 2002 ONFSCDRS 95

FSCO A01-001572

BETWEEN:

DELORES CORCORAN

Applicant

and

CERTAS DIRECT INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Lawrence Blackman

Heard: June 4, 2002, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances: Nan Diaram for Ms. Corcoran Boyd Critoph for Certas Direct Insurance Company

Issues:

I find the following facts as agreed by the parties. The Applicant, Ms. Delores Corcoran, was born on August 8, 1936. She was injured in a motor vehicle accident on May 23, 1997. Ms. Corcoran applied for and received statutory accident benefits from Certas Direct Insurance Company ("Certas"), payable under the Schedule.¹ Certas paid Ms. Corcoran a weekly income replacement benefit ("IRB") of $209.49 from May 30, 1997 until August 3, 2001. On August 8, 2001, Ms. Corcoran turned 65 years of age. From that date, Certas has paid the Applicant a weekly IRB of $17.64, based on its interpretation of section 9 of the Schedule. Ms. Corcoran submits that section 9 entitles her to a weekly IRB of $185 from the date of her 65th birthday.

The parties were unable to resolve their dispute through mediation and Ms. Corcoran 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 issues, as agreed to by the parties, are:

Is Ms. Corcoran's weekly income replacement benefit, after age 65, $17.64 or $185?
Is either party entitled to its expenses of this preliminary issue hearing, claimed pursuant to subsection 282(11) of the Insurance Act.

Result:

Ms. Corcoran's weekly income replacement benefit after age 65 is $17.64.
The expenses of this preliminary issue hearing is deferred to the main hearing arbitrator.

EVIDENCE AND ANALYSIS:

Part II of the Schedule pertains to IRBs. Section 4 sets out the initial eligibility criteria, section 5 the period of the benefit, sections 6 and 8 the determination of the amount of the benefit and section 7 the treatment of collateral benefits.

Section 9 sets out the calculations applicable when an insured, who is already receiving IRBs, reaches age 65 (section 10 pertains to the quantum and duration of IRBs where entitlement arises after age 65). Section 9 provides that:

(1) Despite sections 6 and 7, if a person is receiving an income replacement benefit immediately before attaining 65 years of age, the weekly amount of the benefit shall be adjusted, on the later of the date the person attains 65 years of age and the second anniversary of the date the person began receiving the benefit, to the amount determined in accordance with the following formula:

A = B x 0.02 x C

where,

A = the amount to which the weekly amount of the income replacement benefit shall be adjusted,

B = the weekly amount of the income replacement benefit that the person was entitled to receive immediately before the adjustment, including any additions required by subsection 6 (5) but without making any deductions permitted by subsection 6 (2),

C = the lesser of,

i. 35, and

ii. the number of years during which the person qualified for the income replacement benefit before the adjustment is made.

(2) An income replacement benefit that has been adjusted under subsection (1) is payable until the person dies.

(3) Section 5 and subsections 6 (2) to (6) do not apply to an income replacement benefit that has been adjusted under subsection (1).

[emphasis added]

By letter dated August 10, 2001, Certas wrote the Applicant's counsel advising that Ms. Corcoran's weekly IRB was being adjusted, pursuant to section 9, as follows:

A = B x 0.02 x C

A= New Weekly IRB amount

B= Initial Weekly IRB amount

C= The lesser of 35 or the number of years [Ms. Corcoran has] qualified for the IRB before the adjustment is made (For Ms. Corcoran this value is 4.21 years)

Therefore,

A = $209.69 x 0.02 x 4.21 years = $17.64

[I calculate $17.66, but am not certain where the mathematical error lies]

The Applicant's Submissions:

Ms. Corcoran submits that Certas has engaged in "an unreasonable, unfair and an absurd interpretation of the legislation."

She maintains that as subsection 9(3) provides that section 5 and subsections 6(2) to (6) do not apply to an IRB which has been adjusted under subsection 9(1), by necessary inference, subsection 6(1), and specifically paragraph 6(1)(b), do apply. The latter provision provides that the IRB shall not be less than $185 for each week after the first 104 weeks of disability.

Ms. Corcoran's accident was on May 23, 1997. On May 23, 1999 she had been disabled for 104 weeks. She, therefore, submits that since turning 65 on August 8, 2001, notwithstanding the wording of subsection 9(1), she has been eligible to a minimum weekly IRB of $185. Ms. Corcoran argues that it is a rule of statutory interpretation that the more specific provision (namely, subsection 9(3) of the Schedule) takes precedence over the more general provision (being subsection 9(1) of the Schedule).

Ms. Corcoran orally submits that to decide otherwise would penalize her vis-à-vis other insureds of similar age who could continue to receive, after age 65, a weekly non-earner benefit of $185 ($320 after 104 weeks from the onset of the disability) or a caregiver benefit of $250 or more. She further notes that under section 10, an insured who is 65 years of age at the time of an accident will receive the full IRB to which that person is entitled, as calculated under section 6.

Accordingly, Ms. Corcoran argues that it would be unjust for her to only be entitled to a $17.64 weekly IRB, despite sustaining a disability that now constitutes "a complete inability to engage in any employment for which [she] is reasonably suited by education, training or experience," being the IRB disability test after 104 weeks of disability.

The Insurer's Submissions:

Certas submits that the wording, intention and computation of section 9 is clear and unambiguous and that the provision provides a complete code for the calculation of the quantum of IRBs after an applicant reaches age 65.

The Insurer further argues that one cannot simply import into section 9 only one part of subsection 6(1), while ignoring the balance of the latter provision (which pertains to the initial IRB calculation as being 80 per cent of the insured's net weekly income from employment determined in accordance with section 61).

Certas further maintains that the differentiation between categories of benefits is based on "the historical standard age of retirement" at age 65. It submits that individuals can, and are, treated differently depending on their status (including age) and what legislation happens to be in effect on the date of their accident.

Analysis:

The section 9 adjusted benefit after age 65 is distinctive in a number of ways.

It is payable, under subsection 9(2), until the insured person dies without any requirement that continued disability be established, as subsection 9(3) states that section 5 (which sets out the pre and post-104 week disability tests) does not apply. Entitlement to caregiver benefits, however, requires initially a finding of substantial inability to engage in one's caregiving activities at the time of the accident, and, after 104 weeks of disability, a complete inability to carry on a normal life. Section 10 limits applicants over 65 to four years of benefits. I note that pursuant to subsection 12(8), sections 9 and 10 apply, "with necessary modifications," to non-earner benefits, notwithstanding the Applicant's submissions.

There is no deduction for post-accident income, as subsections 6(2) and (3) do not apply.

There is no adjustment for post-accident losses from self-employment, as subsections 6(5) to (6) do not apply.

There is no apparent deduction for collateral benefits for loss of income, given the wording of subsection 9(1) (which, however, is silent on the effect of section 60 "other collateral benefits").

Section 9 contemplates, fundamentally, a fixed benefit, payable for life, come what may.

This contrasts with section 10 (IRB entitlement arising after age 65) which provides a formula which progressively decreases the weekly benefit to zero over the course of four years. Subsection 10(3) is similar to subsection 9(3), stating that subsections 6(2) to (6) do not apply to a person to whom subsection 10(1) applies. Following the Applicant's logic, a minimum $185 weekly benefit would also be payable under section 10. Considering the wording of section 10,² this would vitiate both subsections 10(1) and 10(2). I do not find this to be the drafter's intention.

I agree with Certas that the intention of section 9 is clear. Its purpose, as made evident by the words "[d]espite sections 6 and 7," is to replace the IRB calculation in subsection 6(1) with a new formula. To interpret subsection 9(3) as reading back in subsection 6(1) would mean not merely a minimum weekly payment of $185 after 104 weeks of disability, it would also mean reading back in the initial formula for calculating IRBs contained in paragraph 6(1)(a), contrary to the whole intent of section 9.

Even reading back in paragraph 6(1)(b) alone does not, I find, assist the Applicant. That provision speaks specifically not of a minimum weekly payment of $185 after the first 104 weeks of disability, but rather, payment of the greater of $185 and the amount specified in paragraph 6(1)(a). As (it is essentially conceded that) the amount calculated under paragraph 6(1)(a) cannot be the applicable weekly payment once section 9 takes effect, I fail to see how the alternative figure of $185 can apply as the minimum payment.

The conflict between the general and the specific is not between subsections 9(1) and (3). Rather, it is between section 9 and section 6. After age 65, specific rules under section 9 apply. In the case of non-earner benefits, $185 no longer represents the weekly amount payable, but rather the amount against which "0.02" and "C" are multiplied. Likewise, with regard to income replacement benefits (as the age 65 adjustment does not take effect until at least the second anniversary of the date the insured began receiving the weekly benefit), $185 serves not as the minimum "A" figure in the section 9 formula set out above, but rather, as the minimum "B."

The language of section 9 could have been made clearer by including specific reference to subsection 6(1) in subsection 9(3) in addition to the provisions of subsection 9(1). However, I find applicable the following comments of the Ontario Court of Appeal in Hope v. Canadian General Insurance 2002 CanLII 44899 (ON CA), [2002] O.J. No. 1643:

Ambiguity cannot be determined by examining words in isolation from the text in which they appear. Nor is ambiguity established by demonstrating that if the legislature had intended a particular meaning, it could have used different language that would have expressed that meaning more clearly. Not all language that falls short of crystal clarity is properly labelled ambiguous.

The Schedule sets out different tests and, indeed, different monetary amounts that apply to different types of weekly disability benefits. I am not persuaded that one may set aside the legislative intent of section 9 by submitting that one has been "penalized" because one is now entitled to a lesser benefit. This is especially true as there appears to be a connection between, on the one hand, a fixed section 9 benefit payable for life without proof of disability, and on the other hand, a potentially significantly lower benefit.

Therefore, I find that section 9 is not subject to a minimum weekly IRB of $185 under paragraph 6(1)(b). Accordingly, I find that Ms. Corcoran's weekly IRB after age 65 is the alternative figure presented to me, namely $17.64.

EXPENSES:

The Insurer was successful in this preliminary issue hearing. However, this hearing dealt with a novel legal issue. Neither party was able to find any case on point.

Although unsuccessful, I am not persuaded, as argued by the Insurer, that the Applicant's position was "manifestly unfounded."

However, I am of the view that the question of the expenses of this preliminary issue hearing is best deferred to the main hearing arbitrator.

June 12, 2002

Lawrence Blackman Arbitrator

Neutral Citation: 2002 ONFSCDRS 95

FSCO A01-001572

FINANCIAL SERVICES COMMISSION OF ONTARIO