Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2004 ONFSCDRS 114

Appeal P03-00016

Appellant

and

Respondent

Before:

David Evans

Representatives:

Robert N. Kostyniuk for Mrs. Austin-Gallagher

Dwaine Burns for Liberty Mutual

Hearing Date:

March 11, 2004

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal is dismissed, and the arbitration decision, dated March 26, 2003, is confirmed.
The parties may contact me within 30 days if they are unable to agree on appeal expenses.

August 11, 2004

David Evans Director’s Delegate

Date

REASONS FOR DECISION

Mrs. Austin-Gallagher was injured in an accident on August 24, 1997. She claimed various statutory benefits under the SABS-1996¹ from her insurer, Liberty Mutual Insurance Company ("Liberty Mutual"). In a decision dated March 26, 2003, the Arbitrator held that she was entitled to only 10 weeks of income replacement benefits ("IRBs") at $173.99 per week, and that she was not entitled to housekeeping benefits or a special award. Mrs. Austin-Gallagher appeals those findings.

In the accident, a vehicle struck Mrs. Austin-Gallagher on the side of the leg. Her most significant injury was to her left knee. Dr. Jeffrey Gollish, orthopaedic surgeon, removed damaged tissue from it on June 4, 1998.

Mrs. Gallagher had been an IKEA salesperson until December 1996. She had been on disability benefits for a work-related injury to October 1996. After her job ended, she received employment insurance ("EI") benefits for 25 weeks. Both before and after her IKEA job she also worked as a part-time bartender, but had not done so for a couple of months before the accident.

Mrs. Austin-Gallagher claimed IRBs. A primary issue on appeal is whether or not Mrs. Austin-Gallagher was employed at the time of the accident. The eligibility criteria for IRBs are set out in s. 4(1) of the SABS-1996, and Mrs. Austin-Gallagher claims that she fits within paragraph 2 of s. 4(1) on the basis that she was not employed at the time of the accident but "was employed for at least 26 weeks during the 52 weeks before the accident. . . ." After the hearing, the Arbitrator asked for submissions on whether she would fit within paragraph 1 of s. 4(1) as being "employed at the time of the accident." In either case, the relevant period for determining her gross income — on which the IRB is based — was the 52 weeks before the accident.²

The Arbitrator found that Mrs. Austin-Gallagher was employed as a part-time bartender at the time of the accident.

This decision affected the period of her entitlement to IRBs, since she returned to the bartending job in November 1997. Accordingly, he only granted benefits up to that point.

The Arbitrator then considered the amount of the benefit. The benefit is based on gross pre-accident income, but the question was whether the gross income included Great-West Life insurance benefits that Mrs. Austin-Gallagher had been receiving during the early fall of 1996.³The Arbitrator concluded it did not. Accordingly, the Arbitrator excluded the insurance benefit from the calculation of gross income.

The Arbitrator then considered Mrs. Austin-Gallagher's claim for housekeeping benefits under s. 22 of the SABS-1996. Liberty Mutual had paid Mrs. Austin-Gallagher housekeeping expenses for about one year but terminated them on the basis of a form signed by her family doctor, Dr. Susan Coish, on July 29, 1998, which stated: "Released to pre-accident home making duties." The Arbitrator rejected Mrs. Austin-Gallagher's explanation that Dr. Coish made that report because of a flippant remark. He reviewed Mrs. Austin-Gallagher's testimony, found her not to be a credible witness, and did not accept her testimony that she required continued housekeeping assistance for any period after Liberty Mutual terminated housekeeping expenses.

Mrs. Austin-Gallagher also appeals the Arbitrator's denial of her claim for a special award pursuant to s. 282(10) of the Insurance Act. He rejected the three grounds that she advanced: that Liberty Mutual misled her by telling her that she did not qualify for income replacement benefits; that it was unreasonable for Liberty Mutual to deny income replacement benefits in the face of medical evidence that she clearly met the test for disability; and that Liberty Mutual unreasonably took the position that she was not employed for 26 weeks in the 52 weeks prior to the accident.

Finally, Mrs. Austin-Gallagher alleges that the Arbitrator "gave the appearance of bias, both during the hearing and in his Reasons for Decision," in that he failed to rebuke Liberty Mutual's counsel, leading to Mrs. Austin-Gallagher's "sarcasm and anger . . . when she was on the witness stand," and that his reasons further "clearly evidenced a dislike" for her.⁴

C. Employed or unemployed at the time of the accident

Mrs. Austin-Gallagher did not initially claim IRBs but rather non-earner benefits pursuant to s. 12 of the SABS-1996.⁵ The Arbitrator, in considering when Liberty Mutual received notice of the IRB claim for the purposes of entitlement to interest, noted that Part 5 of the Application for Accident Benefits (OCF 1/59) asks the applicant, "Which of the following best describes your employment situation at the time of the accident?" and provides checkboxes for "employed" or "not employed." The Arbitrator wrote:

Mrs. Austin-Gallagher thought that "unemployed" best described her employment situation at the time of the accident.

I did not hear or receive evidence on when Mrs. Austin-Gallagher first notified Liberty that she qualified for an income replacement benefit, however, the parties proceeded on the basis that the issue was first raised in the application for mediation in August 2001. . . . I find that Mrs. Austin-Gallagher applied for an income replacement benefit on the last day of August 2001.

Mrs. Austin-Gallagher worked as a salesperson at an IKEA furniture store for approximately 10 years. In August 1996 — that is, at the start of the 52 week pre-accident period — she was receiving disability benefits from Great-West Life arising out of an accident at IKEA. She received these benefits until about October 29, 1996, when she returned to work. IKEA terminated her employment on December 30, 1996, after which she received EI benefits, up to and including July 19, 1997. She had not yet found another job by the time of the accident. In the 52 weeks before the accident, Mrs. Austin-Gallagher also worked "casual part-time" as a bartender for the Westin Harbour Castle Hotel ("Westin"). She started this work in October 1994, when her husband, a Westin employee, added her to the roster he maintained of casual, part-time bartenders. Every two weeks, Westin issued her a pay slip, deducting CPP, EI, income tax and union dues. At the end of the year, it issued her a T4 slip. Mrs. Austin-Gallagher was paid for a total of 27 hours for the two-week pay periods ending between August 31, 1996 and December 7, 1996.⁶ As set out in the Arbitrator's decision, she worked during 8 of 11 pay periods from December 26, 1996, through to May 24, 1997, the last pay period she worked before the accident. She did not report this work while claiming her EI benefits.

Mrs. Austin-Gallagher returned to part-time work at Westin in November 1997. The Arbitrator noted that "Mrs. Austin-Gallagher earned $1,143 from Westin in the eight months before the accident and $1,801 in November and December 1997, after the accident." She also started a daycare business after the accident.

At the hearing, both parties presented their cases on the assumption that Mrs. Austin-Gallagher was unemployed at the time of the accident. Mrs. Austin-Gallagher argued that her part-time bartending work, when added to the 18 weeks she worked at IKEA, qualified her under s. 4(1)2 as having worked for more than 26 of the 52 pre-accident weeks. Liberty Mutual argued that she was an independent contractor and not an "employee" of Westin, and even if she were an employee, her total number of hours worked did not add up to the additional 8 weeks required.

After the hearing, the Arbitrator wrote to the parties inviting submissions "on whether Mrs. Austin-Gallagher was employed with the Westin Harbour Castle Hotel at the time of the accident."⁷ In the decision, he referred to Joyce and Co-operators General Insurance Company, (FSCO P96-000014, March 4, 1997), in which the Director's Delegate concluded that Ms. Joyce, a part-time nurse, was employed at the time of the accident based on her ongoing relationship with her employer, her line of work, and her employment history. The Arbitrator in this case performed a similar examination and reached the same conclusion.

This conclusion was less favourable than Mrs. Austin-Gallagher wished. She had argued that, if she were unemployed at the time of the accident, then the disability test in paragraph 2.iv of s. 4(1) applied, namely that she suffered "a substantial inability to perform the essential tasks of the employment" in which she "spent the most time during the 52 weeks before the accident." She argued that she spent the most time during those 52 weeks at her relatively demanding IKEA job, and so the disability test should be based on her ability to do that job. Instead, the Arbitrator found that she was an employee of Westin at the time of the accident, so paragraph 1 applied. The paragraph 1 disability test requires that, within 104 weeks of the accident, the insured person who was employed at the time of the accident must suffer "a substantial inability to perform the essential tasks of that employment." [Emphasis added] That employment was the relatively less demanding bartending job — a job to which Mrs. Austin-Gallagher returned in November 1997. The result was that the Arbitrator awarded IRBs for a period of about 10 weeks, to the time when he found Mrs. Austin-Gallagher had returned to bartending.

Mrs. Austin-Gallagher argues that she was not employed by Westin at the time of the accident and, accordingly, that the disability test applied to her should be based on the IKEA sales job, from which she claims to remain disabled. As a result, she seeks benefits up to the 104-week period.⁸

First, the Arbitrator's ruling on this point is a question of fact. Appeals are limited to questions of law.⁹ A finding of fact constitutes an error of law only in the face of a finding made in a complete absence of evidence to support it, a finding made on the basis of conjecture, or a finding arising from a misapprehension of the evidence that is caused by a misdirection on a legal principle.¹⁰ Mrs. Austin-Gallagher pointed to no such error. She simply wants me to reassess the evidence, which is not my role.

There was evidence to support the Arbitrator's finding. He rejected Westin's self-serving letter that suggested Mrs. Austin-Gallagher was not an employee because "[b]anquet casuals are deemed hired for each function worked and terminated at the end thereof."¹¹ He also rejected Liberty Mutual's view that Mrs. Austin-Gallagher was only "employed" during the actual hours she was bartending. He also rejected Mrs. Austin-Gallagher's view of an on-again and off-again employee relationship.

Second, Mrs. Austin-Gallagher's submissions are self-contradictory. The confusion in her position is evident in her own submissions to the Arbitrator¹²:

Mrs. Gallagher was a part-time employee of Westin Harbour Castle Hotel, the entire time she was on call to perform services. . . . During the week of the accident, she was not working, or "employed" at performing her job with Westin Harbour Castle Hotel. . . . On the facts here, Mrs. Gallagher was a part-time employee of Westin Harbour Castle at the time of her accident, not an independent contractor.

Thus, Mrs. Austin-Gallagher wishes to be seen as "employed" by Westin for the entire week of any week in which she worked, but not during other weeks. However, that is not very different in principle from the Insurer's stance that she was only employed while she was working. Instead, the Arbitrator properly focused on the ongoing relationship between Mrs. Austin-Gallagher and Westin.

Mrs. Austin-Gallagher submitted that the Arbitrator erred in determining that she was employed at the time of the accident, "although she had not been called to perform any services on the week of the accident, or during the preceding weeks.¹³" However, the Arbitrator's finding is within Commission case law, including Joyce. Thus, in Armstrong and Guardian Insurance Company of Canada (now known as Nordic Insurance Company), (FSCO A97-000956, May 23, 2000, upheld FSCO P00-00037, September 23, 2003), Mrs. Armstrong, a nurse, argued that she was employed on the days when the nursing agencies assigned her work, but was unemployed on the days she had no assigned shifts. The Arbitrator considered Joyce and rejected this argument:

It is clear that employment relationships can span the spectrum from those that involve regular, full-time hours that are worked on a predictable basis to those characterized by a more casual or unpredictable schedule. There is a clear distinction between time actively spent at work, for which wages are received, and the existence of an employment relationship between two or more parties, which could involve long periods of time in which no work is performed or wages received.¹⁴

This case may represent the limit of what could be considered "employment." Indeed, the Director's Delegate in Joyce wrote as follows: "[A]n insured who is simply placed on a roster and called about work from time to time may not qualify." However, if that were true here, I think logically the Arbitrator would have had to find Mrs. Austin-Gallagher was not a Westin employee for the requisite 26 weeks pre-accident. In any event, the Arbitrator did not accept Mrs. Austin-Gallagher's submission that she was an employee one week and not the next. Instead, he followed the dictate of the Director's Delegate in Joyce: "The length of time during which there is no work is a factor in determining whether an employment relationship continues uninterrupted. However, it is necessary to look at the complete picture." That is what the Arbitrator did, and I find it was a reasonable application of the correct legal principles.

I find no error of law.

D. Disability and Duration of Benefits

Mrs. Austin-Gallagher's submissions turn almost entirely on her ability to do the IKEA job, which, she submitted, "requires far more significant physical, mental or time involvement" than the assisted part-time casual bartending to which she returned.¹⁵ She then focused on what was her primary employment, but in that she was relying on entitlement under paragraph 2 of s. 4(1). For instance, she noted that the SABS-1996 "refers to a 'majority' of time during the 52 weeks prior to the accident"¹⁶ — which I take as referring to s. 4(1)2.iv, "the employment in which the insured person spent the most time during the 52 weeks before the accident."

However, I have found no error in the Arbitrator's ruling that paragraph 1 applied — that is, that Mrs. Austin-Gallagher was employed at the time of the accident at the bartending job. The only employment that is relevant under that criterion is the one she was engaged in at the time of the accident, and Mrs. Austin-Gallagher was able to return to that employment. His conclusion that she was no longer disabled from bartending when she returned to it is self-evident. Again, I see no error in law.

E. Quantum of Weekly Benefits

In determining that the disability benefits did not form part of Mrs. Austin-Gallagher's pre-accident gross annual income, the Arbitrator felt bound by York Fire & Casualty Insurance Company and Shearstone, (FSCO P01-00013, January 8, 2002), in which the Director's Delegate ruled that workplace insurance benefits should not be included in calculating gross income from employment. He wrote:

Among other reasons, [the Director's Delegate in Shearstone] cited that the benefits were outside of the employment relationship as they did not constitute the exchange of money for services and that the drafters of the legislation considered what payments for loss of income should be included in "gross income," when they decided unemployment insurance benefits should be included. Presumably, they intended to exclude other payments for loss of income. Lastly, under subsection 9(6) of the 1994 Schedule,¹⁷ temporary disability benefits were included in the calculation of gross income. She concluded that the deletion of temporary disability benefits from the calculation of gross income in the 1996 Schedule was evidence of a legislative intent to narrow the definition of gross income.

Mrs. Austin-Gallagher essentially submitted that the Shearstone decision, on which the Arbitrator relied, ought to be restricted to its own facts. The distinction, she submits, is that in Shearstone the income continuation payments were made by the Workplace Safety and Insurance Board under s. 43 of the Workplace Safety and Insurance Act, 1997 (" WSIA"),¹⁸whereas Mrs. Austin-Gallagher's entitlement to short-term disability benefits allegedly derived directly from her employment contract.

In Shearstone, the insurer successfully appealed the arbitrator's decision that benefits under the WSIA could be considered "income from employment" for purposes of calculating weekly IRBs. Just before the accident, Mr. Shearstone had returned to work after a period of temporary work-related disability during which he received loss of earning benefits under the WSIA. The Director's Delegate reviewed the development of the law relating to the treatment of workers' compensation benefits under the SABS-1990,¹⁹ the SABS-1994, and the current SABS. These benefits were not considered income (and were deductible from IRBs) under the SABS-1990. Temporary disability benefits (workers' compensation benefits and "any other periodic temporary benefit paid under an income continuation plan or law") were then specifically included in the determination of gross income under the SABS-1994 while remaining deductible, so, as the Director's Delegate put it, "the resulting benefits calculation reflects the insured person's financial loss resulting from the accident more accurately than under the SABS-1990." However, s. 8(6) of the SABS-1996, in the section dealing with the calculation of gross income, is once again silent about workers compensation or other temporary disability benefits, and "temporary disability benefit" is now defined only in s. 60, the collateral benefits section.

The Director's Delegate reviewed the use of legislative evolution in considering legislation. She accepted that the regulation should be given a broad and liberal interpretation rather than one that is narrow or technical. She adopted the modern approach to statutory interpretation that calls on courts to interpret a legislative provision in its total context, as described by Justice Laskin in Bapoo v. Co-Operators General Insurance Company, (1997), 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616,²⁰ a case also cited by Mrs. Austin-Gallagher. Nonetheless, the Director's Delegate held: "The only reasonable explanation of the change is that the drafters intended to narrow the definition of 'income' by removing workers' compensation benefits from it." Although a result of excluding workers' compensation benefits from "income" means IRBs may undercompensate an insured's income loss resulting from a motor vehicle accident, she had "little doubt this is what the drafters intended."

This argument, with which I agree, appears to apply equally to the disability benefits Mrs. Austin-Gallagher received. It was agreed that the benefits were paid under an income continuation benefit plan. As previously noted, the definition of "temporary disability benefit" in s. 60(3)(h) of the SABS-1996 includes "any other periodic temporary benefit paid under an income continuation benefit plan or law," other than some exceptions that do not apply here. Mrs. Austin-Gallagher's argument that it is "inconsistent to allow insurers to deduct ongoing S.T.D. payments from IRBs, while not allowing insureds to include S.T.D.s in employment income for the purpose of calculating entitlement to IRBs"²¹ was answered in Shearstone: this is what the drafters intended. Accordingly, I find the Shearstone case is not distinguishable.

The Arbitrator's IRB calculation appears to be otherwise correct, based on the Insurer's accountant's report from PricewaterhouseCoopers. Ms. Austin-Gallagher's own accountant, Mr. Thomas Dyson (who had prepared a report for a future economic loss calculation in the tort action) testified that, assuming the temporary disability benefits were not part of Mrs. Austin-Gallagher's employment income, "[t]he calculations that Price Waterhouse used, I have no problem with."²²

Accordingly, I find no error of law.

F. Housekeeping Expenses

The Arbitrator relied on an earlier report of Dr. Coish, along with his finding that Mrs. Austin-Gallagher lacked credibility, to deny her further housekeeping expenses. Mrs. Austin-Gallagher submitted that the Arbitrator ignored or overlooked a revised report from Dr. Coish. However, the Arbitrator did consider it:

On January 5, 2001, Dr. Coish wrote a letter "To Whom It May Concern" in which she reported "Frances has also retained the services of a housekeeper because she has been unable to do heavy housekeeping. She should now be able to do all regular light housekeeping.". . . Mrs. Austin-Gallagher explained that Dr. Coish made her initial report in July 1998 that she could perform her pre-accident home making duties because of a flippant remark she made to Dr. Coish concerning her health.

He considered Mrs. Austin-Gallagher's explanation for the earlier report and discounted it because of the credibility problems he found with her testimony. The Arbitrator set out a number of examples in his decision where he found credibility problems. There was evidence upon which he could make that assessment, and he was in the best position to make it.

I also note that the earlier report of Dr. Coish was made at a time when housekeeping benefits would have still been available to Mrs. Austin-Gallagher. The second report was made long after the possible entitlement period, as (absent a catastrophic impairment) ss. 22(3) and (4) provide that no payment for housekeeping is required for expenses incurred more than 104 weeks after the onset of disability. Accordingly, the first report was made at a more relevant period.

I do not find that the Arbitrator ignored or overlooked the second report; he simply preferred the earlier report based upon the evidence before him. This was within his discretion. I find no error of law.

G. Special Award

Mrs. Austin-Gallagher appeals on the following ground:

The Arbitrator indicated in his Reasons he heard no evidence that Liberty told [Ms. Austin-Gallagher] that she did not qualify for IRBs. However, page 163 of the Arbitration transcript refers to Liberty Mutual's spring 1998 correspondence denying Gallagher's right to non-earner benefits and IRBs.²³

As best I can tell from the exhibits, the document referred to is an Explanation of Benefits Payable by Insurance Company²⁴ in which the refusal of the non-earner benefit is explained and, in addition, the "Not Eligible" checkbox for IRBs is checked. Even if this is strictly true, it is a minor point that is hardly grounds for overturning the Arbitrator's decision on this issue.

To grant a special award, there has to be a finding that the benefits were "unreasonably" withheld or delayed. A finding of unreasonableness is highly dependent on the Arbitrator's view of the evidence. As held in McConachie and GAN Insurance Company of Canada, (FSCO P97-00069, October 28, 1998), considerable leeway will be given to the Arbitrator's finding unless, as in R.W. and Motor Vehicle Accident Claims Fund, (FSCO P98-00005, June 23, 1999), it is shown that there is a clear error in the Arbitrator's approach amounting to an error in law, or there is a basis to conclude that the process was unfair to a party in some way.²⁵

As noted above, the Arbitrator found that Liberty Mutual was not put on notice of the IRB claim until August 2001. The Arbitrator's findings that "[i]t was not clear until the hearing what the test for disability was" and "it was not clear in fact or law that Mrs. Austin-Gallagher's employment with Westin brought her up to 26 weeks of employment in the 52 weeks before the accident" were entirely supported by the evidence. These were grounds enough to deny a special award. I find no error of law.

H. Bias

Finally, Mrs. Austin-Gallagher raised an allegation that the Arbitrator "gave the appearance of bias, both during the hearing and in his Reasons for Decision."²⁶ She did not cite any cases, but referred to several pages in the transcript where bias was supposedly shown.

My review of those pages shows an interventionist Arbitrator, but in my view, he kept within the scope of his authority to control the process. At several points, he directed his comments to counsel for Liberty Mutual. For instance, at p. 182, he asks counsel to "say something in the form of a question and then just wait for Mrs. Gallagher to finish her answer . . . and if those are her answers, those are her answers." And at p. 189, he again says to counsel, "I think you're deteriorating to make comments . . . [b]ecause it just encourages the similar type of answers." I do not see evidence of bias in those pages.

As for the decision, the Arbitrator was entitled to make findings on credibility that were supported by the evidence. I note that the Arbitrator even took the extra step of seeking submissions on whether Mrs. Austin-Gallagher was "employed" at the time of the accident, and that formed the basis upon which he granted her IRBs, albeit for a short period. I do not see that as evidence of bias.

IV. EXPENSES

The parties may contact me within 30 days if they are unable to agree on appeal expenses.