Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 80
FSCO A05-001539
BETWEEN:
AARON LONGWORTH
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
Lawrence Blackman
Heard:
March 29 and 30, 2006, in Hamilton, Ontario.
March 31, 2006 by telephone conference.
Appearances:
Rhona Waxman and Susan Hampson for Mr. Longworth
Helen D. K. Friedman for Economical Mutual Insurance Company
Issues:
The Applicant, Mr. Aaron Longworth, is presently 25 years of age. He was significantly hurt in a motor vehicle accident in the early hours of January 4, 2005, sustaining amongst other injuries, a T12 compression fracture. Mr. Longworth applied to his first-party insurer, Economical Mutual Insurance Company ("Economical"), for statutory accident benefits payable under the Schedule.1
Mr. Longworth and Economical disagreed as to whether the Applicant was employed at the time of the accident or whether he was employed for at least 26 weeks during the 52 weeks before the accident, and hence, whether he was entitled to payment of weekly income replacement benefits (IRBs).
As the parties were unable to resolve their dispute at mediation, Mr. Longworth applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The parties agree that the weekly IRB payable would be $374.90. They further agree that Mr. Longworth has met and continues to meet the applicable disability criteria. The parties concur that if there is a finding that Mr. Longworth meets the requisite eligibility criteria of section 4 of the Schedule, an order in the said weekly IRB amount should follow.
Accordingly, the issues in this hearing are:
Is Mr. Longworth entitled to weekly Income Replacement Benefits pursuant to either paragraph 4(1)(1) or paragraph 4(1)(2) of the Schedule?
Is Mr. Longworth entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?
Is Economical liable to pay Mr. Longworth a special award pursuant to subsection 282(10) of the Insurance Act, R.S.O. 1990, c.I.8, as amended?
Is Economical liable, under subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, as amended, to pay Mr. Longworth's expenses in respect of the arbitration?
Is Mr. Longworth liable, under subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, as amend ed, to pay Economical's expenses in respect of the arbitration?
The parties jointly requested a further opportunity to make submissions as to the quantum of the special award, should I determine that Mr. Longworth was entitled to same. The parties further agreed that the issue of the legal expenses of this proceeding should be deferred until this decision was issued.
Result:
Mr. Longworth was not employed at the time of this accident, as required by paragraph 4(1)(1) of the Schedule.
Mr. Longworth was employed for at least 26 weeks during the 52 weeks before the accident, in accordance with paragraph 4(1)(2) of the Schedule.
Mr. Longworth is entitled to payment of an income replacement benefit of $374.90 per week, ongoing from January 11, 2005.
In accordance with section 46 of the Schedule, Mr. Longworth is entitled to interest on overdue income replacement benefits at the rate of two per cent per month, compounded monthly, from February 10, 2005 on weekly benefits payable to that date, and thereafter from the end of each subsequent two-week payment period.
Mr. Longworth is not entitled to a special award pursuant to subsection 282(10) of the Insurance Act.
The issue of the legal expenses claimed pursuant to subsection 282(11) of the Insurance Act may now be addressed in accordance with the provisions of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003).
EVIDENCE AND ANALYSIS:
1. Was Mr. Longworth employed at the time of the January 4, 2005 accident?
Mr. Longworth submits that at the time of the January 4, 2005 accident, he was employed by a long-time family friend, Mr. Mark Davies. Mr. Longworth concedes that he was not actually working at the time of the accident. Rather, he submits that he was on a temporary lay-off, intending to return in the Spring of 2005 to his seasonal work building decks and fences with Mr. Davies. The Applicant argues that these facts qualify him as being employed at the time of the accident.
Economical does not agree that Mr. Longworth was employed at the time of this accident. It argues that employment requires active engagement in an ongoing contractual relationship for wages or other remuneration. The Insurer submits that the facts of this case are at best suggestive of a prospective contract of employment rather than an ongoing employment relationship. It notes that for accidents occurring on or after April 15, 2004, prospective contracts of employment under subsection 4(3) no longer constitute employment for the purposes of the Schedule.
Both Mr. Longworth and Mr. Davies were called as witnesses. No other witnesses were called to give direct evidence as to the Applicant's employment either at the time of the accident or in the preceding 52 weeks.
I found both witnesses credible. They appeared to be forthright and honest. They were upfront regarding possible weaknesses in their evidence. Most importantly, to quote the words of O'Halloran J.A. in Faryna v. Chorny, 1951 CanLII 252 (BC CA), [1952] 2 D.L.R. 354, their evidence was:
in harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.
Mr. Davies is presently thirty years old. I accept his testimony that in or about March 2004 he started doing subcontracting fence and deck installation for a group which received contracts from Home Depot. Initially, Mr. Davies had a partner. With work being plentiful, the partners split, each hiring casual labour as assistants, presumably at a lower cost, increasing their net return. Mr. Davies' assistant subsequently quit. Mr Davies' girlfriend took over the less physical aspects of the job for a time, but in September 2004, Mr. Davies was on his own when his girlfriend returned to work at a restaurant, taking over from students returning to school.
On September 14, 2004, Mr. Longworth was suspended from Local 1916 of the Millwrights Union (hereinafter referred to as the "Union"), with the right to reapply after one year. He, therefore, became available to work elsewhere. At the same time, Mr. Davies needed help. I find that Mr. Longworth began working for Mr. Davies on September 20, 2004. I find that it was agreed that Mr. Longworth would earn $12 an hour. I find that Mr. Longworth worked for Mr. Davies until December 17, 2004. I find that he was paid a total of $5,040, as evidenced by a Canada Customs and Revenue Agency T5018 Statement of Contract Payments. I accept that Mr. Longworth, on average, worked thirty hours a week. The parties agree, and I find, that the period September 20 to December 17, 2004 constitutes thirteen weeks of employment.
Economical referred to a January 7, 2005 internal note which records Mr. Longworth's mother as stating that her son was between jobs at the time of the accident and that he was going to miss an upcoming job interview. It submits that as Mr. Longworth was living on his own at the time of the accident (the implication being that he was self-supporting), it was unlikely that he would merely sit around for the winter, waiting for the outdoor renovation season to begin. Economical further notes an occupational therapist's January 28, 2005 note describing the Applicant as between jobs at the time of the accident. Economical submits that this accurately describes Mr. Longworth's then situation, Mr. Davies' business having a short history and being completely dependent on Home Depot, with Mr. Longworth, having no guarantee of employment the next season with Mr. Davies, having the option to look for alternative work.
I find that it was the intention of Mr. Davies and Mr. Longworth as of the accident date to renew their employment relationship in the spring, when the outdoor renovation season commenced. Mr. Longworth agreed that his employment was conditional on Mr. Davies getting work the next season. I find that Mr. Davies began working again in April 2005, receiving Home Depot referrals. However, after a month the group for whom Mr. Davies worked lost its contract with Home Depot. Nonetheless, I find that it was probable, given Mr. Longworth's suspension for at least a year from the Union, that he would have joined Mr. Davies for at least some period of time. Mr. Davies was satisfied with Mr. Longworth's work, describing him as someone with the requisite skills who was ideal for this type of employment. The two men appear to have an excellent relationship. Mr. Longworth testified that Mr. Davies was a buddy, who would help him out if he could.
During the course of adjusting the file, Economical had legitimate concerns regarding this purported employment relationship. The Application for Accident Benefits dated January 20, 2005 had a check box ticked off noting the Applicant as "employed and working" at the time of the accident, which was not correct. The Application failed to mention Mr. Davies' name, referring only to "millwright and general labour" from October 2004 to January 2005. These errors, however, are implicitly accounted for in the accompanying letter of January 24, 2005 from the Applicant's counsel (during the time of the Applicant's convalescence) which noted that completing the form took all of Mr. Longworth's energy and there was little time during the day when he could function. A letter from Mr. Davies himself confirming the employment details was subsequently received by the Insurer on February 18, 2005.
A May 19, 2005 Employer's Confirmation Form completed by Mr. Davies, however, contained two further errors, the first that Mr. Longworth earned $360 each of the four weeks before the accident, the second, that Mr. Longworth had returned to work April 11, 2005. I find that these were simply inadvertent errors. Regarding the first, the Form itself clearly notes Mr. Longworth's last day of work as December 17, 2004. Regarding the latter, Mr. Davies testified that the return to work date was his own. There is no evidence that there was ever any other suggestion that Mr. Longworth had returned to work after this accident. Indeed, counsel's letter accompanying that of Mr. Davies stated that Mr. Longworth had not returned to any form of employment.
A January 11, 2006 letter from Mr. Davies indicated that the last day worked by the Applicant was December 14, 2004. This is the only indication in the evidence of any end date different than December 17, 2004. I take this as, again, simply a human error. I accept Mr. Davies' evidence in cross-examination that he remembered that the last day he and Mr. Longworth worked was the 17th, as he recalled that he then had one week left to do his Christmas shopping.
More confusing for Economical was correspondence from the Applicant's counsel in February 2005 indicating that Mr. Longworth was employed at the time of the accident, notwithstanding Mr. Davies' accompanying letter indicating the December 17, 2004 end date, without any mention about a lay-off or rehiring. Counsel's correspondence the next month included a statutory statement which indicated that Mr. Longworth's pre-accident employment was still available to him, again without any indication of a lay-off or rehiring.
The parties subsequently engaged in an extended exchange of correspondence as to whether the Insurer had the Applicant's permission to directly contact Mr. Davies for clarification. Whatever the possible merits of the Applicant's opposition to this request, his position appears to have, not unreasonably, heightened the Insurer's concerns and created confusion as to whether Mr. Longworth's factual situation constituted employment within the meaning of the Schedule.
Paragraph 4(1)(1) of the Schedule provides that being employed at the time of the accident is one basis for IRB entitlement. Subsection 2(5) of the Schedule provides that:
For the purpose of this Regulation, a person is employed if, for salary, wages, other remuneration or profit, the person is engaged in employment, including self-employment, or is the holder of an office, and "employment" has a corresponding meaning.
Many of the cases referred to by the parties in arguing whether Mr. Longworth met this definition dealt with a prior schedule of accident insurance benefits, namely, Ontario Regulation 672 - Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 ("OMPP"). OMPP did not include a definition of employment and, further, included as one specific basis for IRB eligibility that at the time of the accident one was on a temporary layoff.
Nonetheless, both parties agreed with the statement of Arbitrator Mackintosh in Madore and Co-operators General Insurance Company (OIC A-004305, August 24, 1994), an OMPP case, that employment is not limited to those specific periods when work is being done and wages are being received. Hence, Economical agreed that one can be employed on weekends, even if it is a day off work, as long as there is a continuing employment relationship.
Both parties referred to Arbitrator Palmer's decision in Sharma and Co-operators General Insurance Company (OIC A-003840, February 7, 1994), which, in deciding whether an applicant was on a temporary lay-off, noted that while the intention of the employer and employee were important, it did not govern; rather, what was called for was "an objective, reasoned, interpretation of the individual circumstances."
Sharma was cited in the only decision under this Schedule which counsel provided to me, namely, DaCosta and Dominion of Canada General Insurance Company (FSCO A00-000214, May 28, 2001). The decision, in finding that Mr. DaCosta (a seasonal worker who was usually laid off during the winter) was not employed at the time of the accident, did not include an analysis of the Schedule in question and the prior OMPP.
Part II of the Schedule details the eligibility criteria for, the period of payment of, and the monetary calculation of IRBs. I find that the purpose of this section is to provide a measure of compensation for individuals who meet the requisite minimum connection with the work force. That minimum requisite connection is presently set out in the eligibility criteria of section 4. That criteria may, from time to time, be amended to either make more liberal or more rigorous the necessary pre-accident connection with the paid work force.
I find it pertinent that it is no longer explicit under this Schedule that one qualifies for IRBs if one is on a temporary lay-off at the time of the accident. I find it pertinent that one no longer qualifies for IRBs simply under a future contract of employment. I find it pertinent that subsection 2(5) now defines employment as being engaged in employment or the holder of an office. I find that the changes to the Schedule somewhat restrict the prior eligibility conditions for IRBs
In the OMPP decision of Joyce and Co-operators General Insurance Company (FSCO P96-000014, March 4, 1997), Director's Delegate Naylor stated that:
In my view, the express provision governing "temporary lay-off in section 12(2) 1. ii. confirms that insureds who are not actually working "on the job" at the time of the accident nonetheless may qualify for benefits. However, the existence of a specific provision dealing with lay-offs should not be construed as restricting the ordinary, broad, meaning of "employed" under section 12 (2) 1. i.
Hence, the implication is that "employed" by itself, might include temporary layoffs. The Director's Delegate continued:
The issue in this case is whether Ms. Joyce was simply a casual employee, with periods of employment interspersed with periods of unemployment, as the arbitrator found, or whether she was operating under a contract of employment even during periods when she was not assigned work.
The line between the two situations is sometimes a fine one. However, the fact that the employer has no obligation to guarantee work or that the employee has a discretion to work, while important factors, are not determinative of employment status. Each case must be determined on its own particular facts.
In this case, it is conceded that at the time of the accident Mr. Longworth was not actually working, nor was he receiving from Mr. Davies any remuneration or benefits directly or indirectly. He was no longer on "the books," so to speak, of Mr. Davies' company, which essentially went into hibernation for the winter. Mr. Longworth was not in any way under Mr. Davies' control. He had no obligation to return to work for Mr. Davies, although that may have been his preference in the immediate circumstances. He was a seasonal employee with a limited history with Mr. Davies and with the ultimate intent to return to work as a millwright. At best, I think that Mr. Longworth may have had a prospective new contract of future employment starting in the Spring, conditional upon Mr. Davies again obtaining contracts from Home Depot, which, as events later proved, was not a certainty. I am not persuaded that Mr. Longworth was operating under a contract of employment at the time of the accident.
It was argued that Mr. Longworth would have a cause of action against Mr. Davies should Mr. Davies not have subsequently rehired him, which was one of the considerations of Crockett J. in Houseworth v. Federation Insurance Co. of Canada [1980] O.J. No. 3063, upheld on appeal, [1980] O.J. No. 3062.
However, the judge in that case referred to a definition of "employ" provided by counsel, namely to "have or keep in one's service." That is not the definition provided in subsection 2(5) of the Schedule. Rather, the definition section now requires that one be "engaged in employment." Paragraph 4(1)(1) of the Schedule requires engagement in employment at the time of the accident. This would seem to denote one either being occupied by some measure of employment at the time of the accident, or at the very least, having an existing continuing employment relationship at that specific point in time, as opposed to a purely prospective relationship.
In finding that Mr. Longworth was not "engaged" in employment at the time of the accident either in terms of actual employment or in terms of a contemporaneous continuing employment relationship, I find that he does not meet the conditions of paragraph 4(1)(1) of the Schedule of being employed at the time of the accident.
2. Was Mr. Longworth employed for at least 26 weeks during the 52 weeks before the January 4, 2005 accident?
The Applicant argues, in the alternative, that he meets the prerequisite of having been employed for at least 26 weeks during the 52 weeks before the January 4, 2005 motor vehicle accident.
The parties agree that Mr. Longworth was employed for 13 weeks with Mr. Davies during that 52 week period. The parties disagree as to how one characterizes Mr. Longworth's work history with the Union in 2004, which consists of sixteen distinct periods (ranging from one day shifts of eight to fifteen hours to nine consecutive days of work) set out in the Records of Employment issued by seven different companies (several of them having retained the Applicant's services more than once).
Mr. Longworth argues that he was employed for the entire period from January 4, 2004 (which he says is 52 weeks prior to the accident date) until September 14, 2004, when his union membership was suspended. In the alternative, the Applicant submits that he was employed as a Millwright's Apprentice in eighteen of the weeks between January 4 and September 14, 2004.
Economical argues that union membership, by itself, does not constitute employment. It submits that just as one is not employed simply by membership with the Law Society of Upper Canada, one is not employed by virtue solely of being a member of the Millwright's Union. In the factual situation of this case where it is submitted that there is no ongoing contract of employment, the Insurer argues that paragraph 4(1)(2) of the Schedule does not give credit for an entire week when one is employed only part of a week; rather, Economical argues that in this factual situation credit for a full week requires working a full five days.
I find that Mr. Longworth was employed for at least 26 of the 52 weeks before this accident, for the following two alternative reasons:
(a) That he was continually employed from January 5 to September 14, 2004
I accept Mr Longworth's evidence that it was his hope and plan following his 1998 graduation with a Grade 12 diploma to follow his father in becoming a millwright. A millwright is someone who maintains, cares for and fixes industrial machines. Few individuals, Mr. Longworth testified, are accepted into the Millwrights Union each year.
Being a member of the Millwright's Union entitles one to be placed on a hiring list. While the collective agreement gives each company the right to hire, lay-off, discipline and discharge for just cause, the reality is that when a unionized workplace requires millwrights, it is the union which calls up workers sequentially from its hiring list. One cannot work as a millwright at a unionized place of employment without the permission of the union. The union itself administers short and long term disability plans and pays out vacation and statutory holiday pay from monies remitted by the employers. The Union can discipline, as it did in the case of Mr. Longworth.
Mr. Longworth's hope of becoming a millwright was not a remote dream; his first job after high school, with his father's assistance, was working as a "permit" worker for the Millwright's Union. A permit worker, as I understand it, differs from an apprentice in that one has no continuing benefits or rights under the union contract nor any continuing relationship with the union; one appears to be hired for "one-shot" deals when the union does not have enough members for a particular job.
Mr. Longworth's work as a permit worker continued for some time. In his first year, 1998, he earned $800; in 1999 approximately $8,000; in both 2000 and 2001 he earned approximately $19,000 and in 2002, slightly less. His employment during this period was almost exclusively through the Millwright's Union.
In or about September 2003 Mr. Longworth became an apprentice with the Millwright's Union, following a mechanical aptitude test and a mathematical test. On becoming an apprentice, Mr. Longworth received a number on the hiring list so that he was now guaranteed eventual employment. This was reflected in his Union Pay Statement showing his earnings in 2003 increasing to approximately $27,000.
I find that looking back 52 weeks from the accident date of Tuesday, January 4, 2005 takes one to Tuesday, January 6, 2004. Mr. Longworth had a period of work at Sutherland-Schultz Inc. ending January 4, 2004. I find this period of work is outside the 52-week period. From January 6, 2004 to January 4, 2005, Mr. Longworth earned $13,466.88 as a millwright. I find that during this period:
Mr. Longworth worked 15 separate jobs ranging from one day to nine days, for six different employers, for a total of 409 hours, on a total of 38 separate days, during the course of 17 weeks.
I find that Mr. Longworth worked repeatedly for many of the same employers. I find that he had worked for these companies again and again because the Union sent him to these companies as part of his ongoing relationship with the Union and the Union's ongoing relationship with the individual employers, most of whom are set out in an Association Member List annexed to the collective agreement. I find that Mr. Longworth's engagement in employment increased significantly in 2003 when he became a millwright apprentice.
I find the most helpful case analysis to be the OMPP decision in Joyce and Co-operators General Insurance Company (OIC A-015688, November 23, 1995). Joyce concerned a registered nurse who provided nursing services through two agencies. The issue was whether the applicant was employed at the time of the accident. The arbitrator found that the applicant was not guaranteed work, had the final say whether to take work, was only paid when she worked, was not working or under the control of either agency at the time of the accident, had no firm future assignments and her work in the year before the accident was nominal. The arbitrator concluded that Ms. Joyce was not employed at the time of the accident, that simply being on a list of nurses, with only the potential of being assigned to a patient, was insufficient to be considered employed.
The arbitrator's decision was overturned on appeal (FSCO P96-000014, March 4, 1997). Director's Delegate Naylor wrote:
While "employed" should be given its ordinary meaning, the context and purpose of the statutory scheme must not be ignored. Section 12 benefits are broadly intended to provide compensation, within the parameters of the Schedule, for loss of employment earnings, or opportunity to earn, by reason of disability arising from automobile accidents. Cases that deal with employees' rights in other legislative or common law contexts, such as rights on termination, should be viewed with this in mind.
The Director's Delegate continued that it was necessary to look at the complete picture and consider the nature of the work. While stating that "an insured who is simply placed on a roster and called about work from time to time may not qualify," she found that "the facts of this case go beyond an ad hoc or intermittent roster-type availability," as follows;"
There was an ongoing employment relationship between Ms. Joyce and the agencies for which she worked. Ms. Joyce diligently made herself available for any work that was offered. She had worked for both agencies for a number of years, her annual earnings figures were consistent and she relied on this employment to earn her livelihood over the years, including the year before the accident.
Given the nature of the ongoing relationship between the parties, Ms. Joyce's line of work and her employment history, I am not persuaded that her employment relationship was severed every time she completed an assignment and had no immediate work to follow. In my view, the actions of the parties indicate the opposite.
The only question before me is whether Ms. Joyce qualifies for accident benefits designed to compensate her for an inability to work. The amount of any benefit to which she is entitled is determined by the legislation, and, in her case, is based on her previous earnings in the year before the accident. [See Schedule, subsection 12(7) 1. for the precise formula]
The legislation is remedial and should be given a large and liberal construction that best attains its purposes. The evidence indicates that Ms. Joyce continued in an employment relationship at the time of the accident, even though she did not actually have a case-assignment at that time. I find therefore that she was employed at the time of the accident. This result is consistent with the language and the underlying purpose of section 12 benefits.
The Director Delegate's decision was upheld on judicial review, Co-operators General Insurance Co. v. Joyce [1998] O.J. No. 6557, Ontario Court of Justice (General Division), Divisional Court.
I find that Mr. Longworth was continually employed from January 5 to September 14, 2004, for the following reasons:
I find that the relevant cases are, to a large degree, fact-based. I find that one must look at the reality of the factual situation in a world of ever more variable, flexible and sometimes complex employment relationships;
As in Joyce, Mr. Longworth had made himself available for work that was available, his union work had existed for several years, he had consistent earnings for a number of years (which unlike Joyce, could not be called nominal) and he relied on this income for his support, evidenced by his eventual move back to his parent's home subsequent to the accident because of a lack of continuing income; Mr. Longworth's employment situation was not unique; it was the nature of this industry. The companies included in the collective agreement's Association Member List required essentially out-sourcing skilled labour to maintain and fix their machinery. Rather than each company directly hiring individuals, historically, the Millwrights Union met the companies' employment needs in this narrow area of expertise by maintaining a permanent roster of union members (paid a base rate of $30.99 an hour as of May 23, 2004) to be supplied to companies as the need arose;
I find that it was the nature of the industry that time was of the essence; breakdowns were emergency situations which dictated that the job be done immediately. Routine maintenance jobs needed to be done in a timely manner as often the entire plant would be shut down for repairs. Hence, the short assignments provided to Mr. Longworth were indicative not of a lack of a work ethic or a tenuous connection with the work force; rather they reflected the industry itself and the necessity to get jobs done quickly and efficiently; Notwithstanding the records of employment provided to Mr. Longworth after each assignment, I find that Mr. Longworth had an ongoing relationship not only with the Union, but with the Association Member List and with the individual companies themselves. In the first nine months of 2004, for example, the Applicant worked for Kvaerner Constructors Ltd. on four different occasions and for Aecon Industrial on three different occasions. I find that Mr. Longworth's continuing relationship with the various companies was solely through his Union based on the ongoing contractual terms of the collective agreement;
While Joyce dealt with an ongoing employment relationship with traditional employment agencies, I find that the Union acted in certain key respects as such an agency, placing Mr. Longworth at various jobs with companies which, in a very real sense, can be seen as customers of the Union. It could be argued that Mr. Longworth's earlier employment as a permit worker consisted of specific discrete employment periods which ended upon receipt of one's Record of Employment, as one had no continuing rights under the union contract and one was hired for "one-shot" deals. I find Mr. Longworth's status as a member of the Union distinct from that factual situation;
Economical argued that membership in the Law Society of Upper Canada does not mean that one is employed. However, if one receives referrals through the Law Society, it is difficult to see how one could argue that one is other than engaged in the practice of law, and hence, engaged in employment as defined by subsection 2(5) of the Schedule;
However, the Union had a far greater control over Mr. Longworth's employment than any employment agency or the Law Society of Canada. Unlike the Law Society, the Union had exclusive control over any work to which Mr. Longworth was assigned. Unlike any employment agency, the Union had the power to discipline its members and to exclude them from any further work in the industry. The Union also distributed vacation pay, provided short and long term sick pay, and administered the pension plan;
While he was a member of the Union, Mr. Longworth received employment insurance (EI) between assignments. The evidence was that this was an ongoing EI claim, interspersed by Mr. Longworth advising EI when he had Union assignments. I accept Mr. Longworth's evidence that the only work he sought while on EI was through the Union as a millwright. Although the evidence in this regard was limited, it appeared that this was an historical pattern of Union membership. In my view, the receipt of EI benefits is one factor to take into consideration. In my view, the factual situation here is analogous to that of Joyce, upheld on judicial review, where the Director's Delegate stated:
Given the nature of the ongoing relationship between the parties, Ms. Joyce's line of work and her employment history, I am not persuaded that her employment relationship was severed every time she completed an assignment and had no immediate work to follow. In my view, the actions of the parties indicate the opposite.
I also note that in Austin-Gallaghar and Liberty Mutual Insurance Co. (FSCO A02-000334, March 26, 2003), upheld on appeal (FSCO P03-00016, August 11, 2004), Arbitrator Renahan indicated that the evidence before him pointed to a continuing employment relationship notwithstanding that the applicant was receiving EI benefits during much of the period she was working as casual banquet labour for Westin, the latter's view being that the insured was hired for each function worked and was terminated at the end thereof;
I find that the purpose of Section 4 is to provide a measure of compensation for individuals who meet the minimum requisite connection with the work force. I find that Section 4 is to be interpreted in a purposive, remedial manner and given a large and liberal construction that best attains its purpose. Section 4 provides a mandatory threshold for possible IRB entitlement, which is largely reflective of one's pre-accident employment earnings. Section 4 does not create a windfall;
Being on the Union hiring list, the Union had an obligation to provide assignments to Mr. Longworth and Mr. Longworth had a guarantee of ongoing employment. While Mr. Longworth may have had different jobs or assignments while a Union member, I find, in the specific circumstances of this case, that he was continually employed while holding that position. Accordingly, I find that Mr. Longworth was actively engaged in employment between January and September 2004.
Giving section 4 a liberal, purposive interpretation, I find that Mr. Longworth did meet the statutorily requisite connection with the work force to be deemed employed continuously in 2004 until his suspension from the Union on September 14, 2004. That, by itself, constitutes some 36 weeks, hence meeting the requirements of paragraph 4(1)(2) of the Schedule.
(b) That being employed part of a week, in this factual case, constitutes employment for a full week.
Mr. Longworth submits that from January 4 to September 15, 2004, he worked a total of 437 hours. As I have found that 52 weeks prior to the accident takes one back to January 6, 2004, the actual hours worked are reduced to 426 hours.
The Applicant notes that as his thirteen weeks working with Mr. Davies is conceded, he requires a further thirteen weeks of employment to meet the requirements of paragraph 4(1)(2) of the Schedule. Dividing 426 hours by thirteen weeks equals an average of 32.8 hours of work per week (which is greater than the accepted thirty-hour work week with Mr. Davies). Conversely, if one divides the 426 hours by the accepted thirty-hour work week with Mr. Davies, the result is 14.2 weeks of employment, which, when added to the thirteen weeks with Mr. Davies, totals 27.2 weeks, which meets the requirements of the Schedule.
Mr. Longworth further submits he earned $13,476.88 as a Union member between January 6 and September 15, 2004. That amount, divided by thirteen weeks of employment, equals $1,036.83 gross income per week. The Applicant submits that this is further evidence of his requisite connection with the work force for a thirteen week period. Mr. Longworth submits that the Insurer is, however, protected as it would pay weekly IRBs not on the basis of $1,036.83 per week, but rather based on his average income over the entire 52 week period, the Insurer's accounting experts having calculated a weekly IRB of $374.90.
Economical submits that subparagraph 4(1)(2)(ii) requires that one be employed "for" 26 weeks; it is not sufficient that one is employed at some point "in" or "during' the week. Hence, one must be employed the entire week. Being employed less than a full five days a week would be insufficient, unless "that is due to the particular nature of their employment relationship which is agreed upon and ongoing in nature." Economical submits that such a relationship did not exist in this case because Mr. Longworth had discrete individual employers with whom he severed the employment relationship at the end of each assignment.
Subparagraph 4(1)(2)(ii), in setting out the requirement that one must be employed for at least 26 weeks during the 52 weeks before the accident, does not define what is meant by the word "week."
While it appears that 52 weeks means each of the 52 weeks consisting of seven days, there is no suggestion that each of the 26 weeks requires that one be physically and/or mentally engaged in actual employment on each and every day of the seven calendar days of the week. The Insurer's argument is that statutory holidays, weekends, vacations and regular time off can be ignored, if that is reflective of the particular nature of the ongoing employment relationship.
Hence, if one's normal long-term ongoing employment relationship was to work a one day eight-hour shift a week, earning a general minimum wage effective February 1, 2006 of $7.75 an hour, totalling $62 a week, one would be considered to employed for that entire week.
Mr. Longworth worked in 17 different calendar weeks between January 6 and September 15, 2004. Some of those weeks he worked one day. Some of those weeks he appears to have worked up to six days. His earnings during that period is estimated by the Applicant at $13,476.88. That amount is not contested by the Insurer. The average weekly earning would be $792.76.
It would seem to be unfair that potentially, a person earning $62 a week can be considered employed for the entire week, and a person earning $792.76 during a week is not to be given credit as being employed for the full week. The Insurer submits that the Legislature, by not using the word "during" in the said paragraph, intended such a result.
I find that the term "week" as used in subparagraph 4(1)(2)(ii) is ambiguous. It can refer to a seven-day/twenty four hours a day calendar week, it can refer to a five-day/eight hours a day working week, it can refer to some lesser period of time. Does 26 weeks mean 182 actual days of employment (i.e. seven days a week times 26 weeks)? Does it require 130 actual days of employment (at five days a week)? Does a person who has a single three-day contract consisting of 12-hour shifts (for a total of 36 hours) not make the cut, while a person working a five-day contract, seven hours a day (totalling 35 hours) meet the statutory requirement?
In Bapoo and Co-operators General Insurance Company (October 20, 1997, Docket C25188), Laskin J. stated that:
The interpretation of a statutory provision should not only comply with the legislative text and promote the legislative purpose, it should yield a reasonable and just outcome.
He continued:
Avoiding unjust or unacceptable results is an essential part of the court's task in interpreting statutory language.
The Interpretation Act, R.S.O. 1990, c. states, at section 10, that:
Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of any thing that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.
Combined with the requirement that this remedial legislation should be read liberally to meet its purpose of providing a measure of compensation for those with the requisite connection with the labour force, I find that it would be unreasonable and unjust to exclude Mr. Longworth on the interpretive basis that although he worked 426 hours in seventeen separate weeks, earning $13,466.88, at best, that would amount to only two weeks of employment, because for only two of those weeks did he work at least five calendar days.
Accordingly, in the alternative, I find that Mr. Longworth was employed for each of the 17 weeks that he was engaged in job assignments by the Union between January 6 and September 15, 2004. That, together with the agreed thirteen weeks of employment with Mr. Davies, meets the statutory pre-requisite of paragraph 4(1)(2) of the Schedule.
3. Is Mr. Longworth entitled to interest, pursuant to section 46 of the Schedule, and if so, from what dates?
Mr. Longworth claims interest on the overdue payment of IRBs in accordance with section 42 of the Schedule.
Section 42 provides that an amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under Part X of the Schedule. Section 42 further provides that if payment of a benefit is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of two per cent per month, compounded monthly.
Subsection 35(2) comes within Part X of the Schedule. Subsection 35(2) provides that if the insurer determines that weekly benefits, including IRBs, are payable, it shall pay the benefit within fourteen days after receiving the application. Subsection 35(4) requires an insurer to pay weekly benefits, including IRBs, at least once every second week. Economical submits that subsection 35(2) means that interest runs only from the date the insurer has sufficient information to be able to determine the claim. Accordingly, it argues that at the earliest, interest in this case should run from fourteen days after receipt of the Applicant's March 2, 2005 letter enclosing numerous Records of Employment as well as a chart summarizing the specific weeks and hours of work during the relevant period.
In the alternative, the Insurer submits that interest should run from fourteen days from June 21, 2005 (when a copy of the Applicant's filed income tax return was provided) or from February 6, 2006 (when the Applicant provided a letter from Mr. Davies which responded to questions posed by the Insurer).
Mr. Longworth argues that the Insurer's February 18, 2005 log notes indicate receipt of his counsel's February 16, 2005 letter enclosing both Mr. Davies' letter confirming the Applicant's employment period, rate of pay and hours of work as well as Revenue Canada's T5018 which confirmed Mr. Longworth's 2004 seasonal labour earnings. As supporting data to his Application for Accident Benefits received earlier by the Insurer, the Applicant submits that Economical had sufficient information as of February 18, 2005 to evaluate his IRB claim, and hence, interest should run from fourteen days thereafter.
Neither party provided case law regarding when interest should begin to run.
The Ontario Court of Appeal, in Attavar v. Allstate Insurance Company of Canada, 2003 CanLII 7430 (ON CA), 63 O.R. (3d) 199, addressed the question of interest under section 68 of The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996. Citing several arbitration decisions, the Court upheld the principle that notwithstanding that the interest rate provided for was above the bank rate, the provision was not punitive but, rather, was compensatory and meant to encourage insurers to pay accident benefits promptly. Accordingly, the Court upheld the trial judge's order that interest was payable fourteen days after receipt of the application for the disputed weekly benefit.
Interest under the current Schedule was considered by Director's Delegate Evans in Totic and Primmum Insurance Co. (FSCO P03-00033, July 26, 2004). That decision dealt with a death benefit claim arising out of a September 1998 accident. The insurer argued that interest did not commence until December 2002 when it received supporting documentation. Primmum specifically relied on the arbitration decision in Iankilevitch and CGU Company of Canada (FSCO A01-000942, October 4, 2002) (subsequently reversed on appeal), where the arbitrator found that the applicant had sought to thwart the insurer's assessment of her benefits by delaying production of reasonably required information or by ignoring requests altogether, such that section 33 of the Schedule disentitled the Applicant to IRBs for a specific period of time.
In deciding that interest should flow from thirty days after the application for death benefits was filed in 1999, Director's Delegate Evans cited a strong line of cases confirming that an application does not have to include all supporting documentation for interest to run based on the date of the application for benefits. He specifically cited Director's Delegate Naylor decision in Canadian Surety Company and Sebastian (FSCO P96-00032, July 28, 1998), referred to in Virk and Liberty Mutual Insurance Company of Canada (FSCO P04-00027, July 5, 2005) by Director's Delegate Makepeace as still the leading case. As stated by Arbitrator Manji, in Mark and Dominion of Canada (FSCO A96-000341, January 27, 1999), the effect of Sebastian is that "[a]n application is completed when it is filled in, not when sufficient documentation is provided to determine the claim."
Director's Delegate Makepeace, herself, in Cole and Allstate Insurance Company, (FSCO P01-00016, May 23, 2003) stated that:
Commission adjudicators have frequently reaffirmed that interest under the SABS is mandatory, compensatory, and flows from late payment of overdue benefits. There is no need for a finding of insurer misconduct. Accordingly, upon a finding of entitlement, interest flows even though the insurer had legitimate reasons for questioning the claim or requiring more information.
The Director's Delegate also cited Director Draper's decision in Bajic and Pafco Insurance Company and Zurich Insurance Company, (FSCO P00-00050, June 5, 2001), which also rejected the view that interest does not accrue until the claim is established:
While "overdue" must be given meaning, I find no indication that the legislative intention is to relieve insurers from paying interest whenever the insured person's entitlement is questionable.
Director Draper used the same reasoning in Bajic as the Court of Appeal in Attavar, namely that "the high rate of interest imposed by [the interest section] is clearly meant to encourage insurers to pay benefits in a timely fashion."
In Virk, Director's Delegate Makepeace noted what she called a narrow exception to the general rule, as set out in Bajic, where "the insured person acts in a manner that effectively prevents the insurer from assessing his or her entitlement." She also noted the Director's prior decision in this regard in Trendle and Economical Mutual Insurance Company, (OIC P96-00009, July 11, 1996), where, as noted by Director's Delegate Evans in Totic, the applicant fabricated documentation and actively concealed that he worked after the accident.
Applying the case law to the facts of this proceeding, I find that Economical received the Application for Accident Benefits on January 27, 2005, as evidenced by its date stamp. Accordingly, interest would begin to run fourteen days thereafter, unless this case falls within the narrow exception provided for in Trendle and Bajic.
In this case, I am not persuaded that the Applicant acted in a manner effectively preventing the Insurer from assessing his entitlement. Nor is this a situation where evidence was fabricated or concealed. Rather, this case involved a somewhat distinct employment situation. Although some incorrect information was provided, I ascribe this to human error compounded, early on, by the Applicant's extremely weakened physical condition. The Insurer was provided, usually in a timely manner, not merely with the Application for Benefits, but also with letters from the Union, correspondence from Mr. Davies, the Revenue Canada T5018, Records of Employment from the numerous individual employers (and a chart summarizing same), a statutory declaration from the Applicant, as well as Mr. Longworth's relevant income tax return.
While there was a disagreement between the parties regarding the Insurer obtaining a statement directly from Mr. Davies, I am not persuaded that this was part of any attempt by the Applicant to thwart or prevent the Insurer from assessing his claim or to deceive Economical.
Accordingly, I find that IRBs were overdue as of February 10, 2005, being fourteen days after the Insurer's receipt of the Application for Accident Benefits. Interest will run on the overdue IRBs at the rate of two per cent per month, compounded monthly, from February 10, 2005 on weekly benefits payable to that date, and thereafter from the end of each subsequent two-week payment period.
4. Is Mr. Longworth entitled to a special award pursuant to subsection 282(10) of the Insurance Act?
Mr. Longworth claims a special award pursuant to subsection 282(10) of the Insurance Act.
Subsection 282(10) provides that a special award shall be granted where an arbitrator finds that an insurer has unreasonably withheld or delayed benefits payable under the Schedule. The subsection proceeds to set a monetary cap for any such award. The parties requested a further opportunity to make submissions as to the quantum of the special award, should I determine that Mr. Longworth was entitled to same.
Mr. Longworth argues that Economical's refusal to pay weekly IRBs was unreasonable. He submits that the approach taken by the Insurer to determine entitlement, being prepared only to consider a forty-hour or longer work week, was extremely onerous.
Economical submits that there is no basis for a special award. It argues that it responded in a timely manner to the information submitted, information which it submits was contradictory, inconsistent and confusing. The Insurer states that it was blocked at every turn in its attempt to contact Mr. Davies to clarify the information provided. Regarding the question of how one assesses weeks of employment, Economical submits that there is a genuine issue of interpretation, noting that there were no cases directly on point.
Two leading cases concerning special awards are Erickson and the Guarantee Company of North America (OIC A-000560, July 16, 1992) and Plowright and Wellington Insurance Company (OIC A-003985, October 29, 1993). In Erickson, Senior Arbitrator Rotter held that:
In this case, the Insurer's representative has already conceded that it erred in suspending the Applicant's benefits. I must decide whether that suspension was not only erroneous, but also unreasonable. The Oxford English Dictionary defines the term unreasonable as "1. going beyond the limits of what is reasonable or equitable; 2. not guided by or listening to reason." I adopt this definition.
In Plowright, Arbitrator Palmer stated that:
"Unreasonable" behaviour by an Insurer in withholding or delaying payments can be seen as behaviour which was excessive, imprudent, stubborn, inflexible, unyielding or immoderate.
In this particular case, I find that one is dealing with a rather novel fact situation where there is a dearth of case law specifically on point.
Regarding the issue of the Applicant being employed for at least 26 weeks during the 52 weeks before accident, Economical's position in this case that a week must have five working days and, implicitly, that a day must have eight working hours, may represent a very conservative, narrow interpretation of the Schedule. There may perhaps have been a fixation on this interpretation, notwithstanding counsel's sometimes leading or prompting questions in chief to the insurer's representative that Economical was indeed keeping an open mind throughout its adjusting of this file.
However, I am not persuaded that Economical's behaviour was stubborn, inflexible and unyielding. Rather, I am of the view that this was an interesting, novel area where it was not unreasonable to seek an adjudicative interpretation.
I am of the view that both parties, through their counsel, strove to move this matter along expeditiously, endeavouring to hone in on what was truly pertinent to the issues at hand, and I thank them for same.
EXPENSES:
Having now determined the issues in dispute, except that of legal expenses, the parties may now address the issue of the legal expenses of this arbitration proceeding, in accordance with the provisions of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003).
May 18, 2006
Lawrence Blackman
Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 80
FSCO A05-001539
BETWEEN:
AARON LONGWORTH
Applicant
and
ECONOMICAL 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:
- Economical shall pay Mr. Longworth an income replacement benefit of $374.90 per week, ongoing from January 11, 2005
I. Economical shall pay Mr. Longworth interest on overdue income replacement benefits at the rate of two per cent per month, compounded monthly, from February 10, 2005 on weekly benefits payable to that date, and thereafter from the end of each subsequent two-week payment period.
II. The issue of the legal expenses claimed pursuant to subsection 282(11) of the Insurance Act may now be addressed in accordance with the provisions of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003).
May 18, 2006
Lawrence Blackman
Arbitrator
Date