Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 116

FSCO A04-000852

BETWEEN:

JAN MAGUIRE-CARD

Applicant

and

RBC GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Rosemary Muzzi

Heard:

January 10 and February 11, 2005, in Kingston, Ontario.

Appearances:

Ted Bergeron for Mrs. Maguire-Card

Catherine Korte for RBC General Insurance Company

Issues:

The Applicant, Jan Maguire-Card, was injured in a motor vehicle accident on March 2, 2002. She applied for statutory accident benefits from RBC General Insurance Company ("RBC"), payable under the Schedule¹ and received some of those benefits. On April 15, 2004, through her counsel, Mrs. Maguire-Card applied for weekly income replacement benefits (IRBs) for the first time. She sought payment of IRBs from July 15, 2002. RBC denied these benefits. The parties were unable to resolve their disputes through mediation, and Mrs. Maguire-Card 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 are:

1. Is Mrs. Maguire-Card precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 51(1) of the Schedule?

2. Is Mrs. Maguire-Card entitled to income replacement benefits because she meets the requirements of section 4(3)1 of the Schedule?

Result:

1. Mrs. Maguire-Card is precluded from proceeding to arbitration.

2. Mrs. Maguire-Card is not entitled to income replacement benefits because she does not meet the requirements of section 4(3)1 of the Schedule.

EVIDENCE AND ANALYSIS:

1. Is Mrs. Maguire-Card precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in section 51(1) of the Schedule?

Section 51(1) of the Schedule sets the time limit for the commencement of an arbitration to two years after an insurer has refused to pay the amount claimed by the insured. Mrs. Maguire-Card argues that she did not apply for IRBs until April 15, 2004, by letter sent by her counsel to RBC.

That letter stated in part:

It has come to my attention that Jan Maguire-Card and her husband prepared a business plan in respect of Jan's aspirations to run a catering business prior to her collision. The business plan together with a successful graduation would have entitled her to start her business within a year of the date of the collision. She clearly became and remains unable to engage in that or any employment.

She asserts that RBC's refusal to pay her IRBs first came in the form of a response to her counsel's letter, by Explanation of Benefits dated May 5, 2004, which asserted that the proposed business plan submitted is not analogous to an offer of employment in writing and that, as a result, Mrs. Maguire-Card did not meet the eligibility criteria for IRBs under section 4(3)(1) of the Schedule. She explains that she applied for IRBs more than two years after the accident occurred because she was unaware until then that her intention to start her own business and the written business plan might entitle her to IRBs.

RBC argues that the initial denial of IRBs occurred on March 22, 2002 by Explanation of Benefits in which Mrs. Maguire-Card was informed that she was not entitled to IRBs based on the information that she had provided in her Application for Accident Benefits dated March 13, 2002.

A clear and unequivocal refusal to pay benefits is required to trigger the consequences of the limitation period in the Schedule.² I find that the Explanation of Benefits dated March 22, 2002 constitutes RBC's clear and unequivocal refusal to pay Mrs. Maguire-Card any IRBs, therefore, the two-year time limit runs from that date and Mrs. Maguire-Card's application for arbitration is clearly outside that limit.

I do not accept Mrs. Maguire-Card's argument that she did not apply for IRBs until her counsel's letter of April 2004 because she was unaware that she might qualify for these benefits until that point. Mrs. Maguire-Card had many opportunities to reveal to RBC her intention to start a business within one year of the accident and failed to do so without reasonable explanation.

Mrs. Maguire-Card was the only person who knew of her own plans and, given the obligation on her to provide her insurer with the information reasonably required to assist the insurer in determining entitlement, should have revealed her circumstances to RBC well before April 2004. Her evidence was that she had formed her intention to start a business and had committed it to a final written business plan in the winter of 2001-2002, before her accident of March 2, 2002. By letter dated March 6, 2002, RBC's independent adjuster provided Mrs. Maguire-Card with information related to her claim for accident benefits and the documentation that needed to be completed. Mrs. Maguire-Card indicated on her Application for Accident Benefits that she was a student, rather than that she was not employed and had a written agreement to start work within one year. During her interview with the adjuster on March 7, 2002, Mrs. Maguire-Card did not reveal her prospective employment or future business plans. Finally, Mrs. Maguire-Card had retained counsel at least as early as June 17, 2002. I heard no reasonable explanation for why Mrs. Maguire-Card could not have revealed her plans to RBC long before she did.

Even if I had determined, however, that Mrs. Maguire-Card's application for arbitration on the refusal to pay her IRBs had met the time-limit in section 51(1), on the merits of her case, I find that she is not entitled to IRBs. My analysis and reasons follow.

2. Is Mrs. Maguire-Card entitled to income replacement benefits?

Mrs. Maguire-Card was not working at the time of her car accident. Instead, she had been enrolled in a culinary program at the Liaision College of Culinary Arts with a view to obtaining an Advanced Cooking Certificate. She was to have completed the program on June 28, 2002. During the winter of 2001-2002, Mrs. Maguire-Card finalised a business plan for her catering business on which, she claims, she consulted with one of her course instructors.

Mrs. Maguire-Card claims that these circumstances bring her within the meaning of section 4(3)1 of the Schedule, which provides that persons with prospective employment may qualify for IRBs assuming they meet these requirements:

the insured person was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing and, as a result of and within 104 weeks after the accident suffers a substantial inability to perform the essential tasks of the employment he or she was entitled to start under the contract. (Emphasis added)

Mrs. Maguire-Card argues that, taking into account the purpose and the language of the Schedule, and the fact that the legislation is remedial in nature, the breadth of coverage should be expansive enough to include someone in her circumstances. The written business plan she formulated, prior to her accident, is analogous to an offer of employment because a self-employed person is still employed for the purposes of the Schedule³ Therefore, her circumstances are captured under section 4(3)1. The fact that her situation makes it difficult to quantify the actual amount of IRBs to which she might be entitled does not disentitle her to those benefits.

I take no issue with some of the propositions advanced by Mrs. Maguire-Card. For example, it is widely accepted that the scheme and purpose of the legislation do support a broad interpretation of the language of the Schedule.⁴ Further, I have no trouble accepting that a self-employed person is employed or that self-employment can be regarded as employment for certain purposes.⁵ Still, however, I must decide whether Mrs. Maguire-Card is entitled to IRBs because she fits within section 4(3)1. While I agree that the provisions of the Schedule should be given a broad interpretation given the remedial nature of the legislation, there is no authority before me indicating that I can ignore the language of the provision that I must apply.

Section 4(3)1 does not state that persons who will become self-employed within a year are entitled to IRBs. It states specifically that a person must be entitled at the time of the accident to start work within one year under a legitimate contract of employment. In my view, even giving it the widest interpretation possible, the section still demands that some work actually be forthcoming within a year.

Mrs. Maguire-Card's argument appears to be that her prospective self-employment, as a caterer, was to provide her with prospective employment or work. Her evidence in this regard is her written business plan. Having examined the plan itself and the other circumstances evident in this case, however, I find no evidence that Mrs. Maguire-Card's intended business was to provide her with employment or work within one year.

While one need not actually be working to be self-employed - because, for example, a self-employed person can be between clients or experiencing a downturn in business because of economic circumstances - an intention to be self-employed or a declaration of self-employment, even coupled with a written business plan, does not necessarily create employment or work. Indeed, there is a line of FSCO cases that concludes that these indicia are not even sufficient to find that a person is self-employed. Arbitrators have required more than a simple declaration of self-employment or an intention to be self-employed to find the existence of self-employment.⁶Moreover, arbitrators have also found where self-employment has been proved, there is no offer of employment without evidence of specific work to be done.⁷

Mrs. Maguire-Card's written business plan does not offer her any work. It is, rather, a formulated scheme by which she intends to organise her catering business. The plan outlines the nature of her venture and what is necessary to make it viable as a profitable business. It lists the projected, anticipated, types of functions and the total number of those functions that Mrs. Maguire-Card might expect to cater per year. No work flows from the business plan on its own.

Furthermore, there is no evidence of any contracts of employment, as, in fact, required by section 4(3)1, from which work would flow. Mrs. Maguire-Card's plan details the expected prices to be charged for each type of function, the expenses and the profits that might be realised. For example, Mrs. Maguire-Card anticipates catering approximately 16 weddings per year from which her net profit will be $27,904. The profit figure is arrived at by assuming that the average wedding attendance will be 100 people with a certain charge per person, and then subtracting costs for food and the labour of a prep person and some servers. She used a similar formula for calculating her profits from the Christmas, New Years, birthdays and parties she might cater in a year. However, Mrs. Maguire-Card could not identify any clients for whom she would cater even one wedding much less the 16 she projected. With respect to dinner parties, she had made inquiries with persons she knew who had hosted formal dinner parties in the past and they suggested that they would gladly hire her in the future to cater a dinner party because they had used caterers before. With respect to Christmas parties, she could think of several people she would approach. But, there was no evidence of contracts or agreements having been entered with any particular such clients.

Mrs. Maguire-Card's evidence was clear: she had not yet started her business in any concrete way. She had no agreements with employees, no agreements with financial institutions for financing and no agreements for advertising of her new business. In fact, at the time she finalised the business plan, she did not even have her credentials because she had not completed the culinary program.

Mrs. Maguire-Card's business plan did not guarantee her work either at the time she finalised the plan or even for the future. There was no evidence of any kind of work having been created by the business plan. The only work that her business is to undertake is the supply of catering services to prospective clients. She had no clients at the time of the accident because she did not even have a business. Moreover, there was no evidence of prospective clients within a year of the accident. Consequently, there was no evidence that she would be entitled to start work as required by section 4(3)1 of the Schedule.

To address finally one of the particular analogies raised by counsel for Mrs. Maguire-Card, I do not agree that her situation is similar to a commission salesperson for a department store. Assuming without deciding that section 4(3)1 would apply to a commission salesperson, while it is true that it would be difficult to assess what a commission salesperson would have earned had he a legitimate contract of employment to commence work within a year of the accident, it is not that there is speculation required to assess Mrs. Maguire-Card's actual IRBs that takes her outside of section 4(3)1. Instead, it is the fact that I must speculate about the very existence of prospective work. There is nothing in the language of section 4(3)1, or the rest of the Schedule, that allows for so broad an interpretation that I can find prospective work in circumstances such as these.

EXPENSES:

The parties did not argue the issue of expenses before me. The parties should attempt to resolve their claims for the expenses of this arbitration process by reviewing Rules 75 to 79 of the Dispute Resolution Practice Code. If the parties are unable to resolve the issue of expenses, either party may request, in accordance with Rule 79, an appointment before me to determine expenses.

August 19, 2005

Rosemary Muzzi

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 116

FSCO A04-000852

BETWEEN:

JAN MAGUIRE-CARD

Applicant

and

RBC GENERAL 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. Mrs. Maguire-Card is precluded from proceeding to arbitration.

2. Mrs. Maguire-Card is not entitled to income replacement benefits because she does not meet the requirements of section 4(3)1 of the Schedule.

August 19, 2005

Rosemary Muzzi

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Smith v. Co-operators General Insurance Co. 2002 SCC 30, [2002] 2 S.C.R. 129
3. 3While it is unnecessary to cite authority for the proposition that an offer and a contract are, in fact, different things, Black's Law Dictionary (5th Edition) does offer some assistance. An offer is defined as a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that their assent to that bargain is invited and will conclude it. At its most basic, a contract is defined as an agreement between two or more persons which creates an obligation to do or not to do a particular thing. Nonetheless, I am prepared to set aside what, in my view, is an obvious problem with the applicant's approach and deal initially with the other aspects of the argument.
4. 4In fact, many of the cases to which I was referred by both parties emphasize this very point. See for example, Bapoo v. Co-operators General Insurance Co. 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616 [1997] O.J. No. 5055; Bress and State Farm Insurance Companies, (OIC A-000191 and OIC A-000192, March 23, 1992)
5. 5See, for example, section 2(5) of the Schedule
6. 6Palumbo and Dominion of Canada General Insurance Company (OIC A-007314, April 13, 1995)
7. 7Kasap and Allstate Insurance Company of Canada (OIC A-012020, August 2, 1996) This case was decided under a different Schedule but is helpful nonetheless as it deals with what constitutes an offer of employment and the argument made is that self-employment itself somehow constitutes an offer of employment.