Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 134

Appeal P07-00006

AMANDA JANE ELDRIDGE Appellant

and

AXA INSURANCE (CANADA) Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. J. David Lindsay and Ms. Sandra L. Shaw for Ms. Eldridge Mr. M. Greg Abogado for AXA Insurance (Canada)

HEARING DATE: April 4, 2008 Further written submissions were received by May 5, 2008

APPEAL ORDER

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

The Arbitrator’s decision is confirmed that at the time Ms. Eldridge turned sixteen on November 19, 1999, no Educational Disability Benefit was payable unless the Appellant was suffering a complete inability to carry on a normal life as a result of the accident.
When Ms. Eldridge turned sixteen on November 19, 1999, she was entitled to a Loss of Earning Capacity Benefit Offer if she continued to suffer either a partial or complete inability to carry on a normal life. This matter is remitted to arbitration for a determination of this issue.
If the parties are unable to agree on the legal expenses of this appeal proceeding, an expense hearing may be requested in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

August 11, 2008

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The more recent history regarding compensation under the Insurance Act, R.S.O. 1990, c. I.8, for individuals injured in motor vehicle accidents has been a range of recovery between one’s own insurer and the insurer of the at-fault party.

The legislation which looked most to first party recovery (rather than third party, tort recovery) was the Bill 164 Schedule.¹ The Appellant, Ms. Eldridge, was involved in a motor vehicle accident on July 12, 1996, and applied to her first party insurer, AXA Insurance (Canada) (the “Respondent”), for benefits under this Schedule.

Under the Schedule, third party recovery for a person injured in a motor vehicle accident was restricted under section 267.1 of the Insurance Act to non-pecuniary loss, and then only if one had died or had sustained a serious disfigurement or serious impairment of an important physical, mental or psychological function. In Hodgson et al. v. Walsh 1999 CanLII 3741 (ON CA), [1999], 44 O.R. (3d) 598, the Ontario Court of Appeal upheld the lower court’s decision that loss of earning capacity is not a form of non-pecuniary loss for the purposes of section 267.1.

This legislation contrasts with the subsequent Bill 59, that came into effect November 1, 1996, and that allowed for recovery of damages for loss of income and loss of earning capacity, with some restrictions up to the trial of the action.

Consistent with the significant restriction on third party recovery, Bill 164 allowed much broader rights of first party recovery from one’s own automobile insurer, including loss of earning capacity benefits (“LECBs”). Prior to claiming LECBs, an insured person was first, however, required to qualify for income replacement benefits (“IRBs”), education disability benefits (“EDBs”), caregiver benefits (“CGBs”) or other disability benefits (“ODBs”).

The Appellant was born on November 19, 1983. She was twelve years old at the time of the accident and had just completed grade seven. In his decision dated February 6, 2007, Arbitrator Rogers (the “Arbitrator”) found that the Appellant had sustained a significant head injury in this accident, as well as orthopaedic injuries. Following surgery, the Appellant was discharged from an extensive rehabilitation program on October 4, 1997. She returned to grade eight, from which she graduated on June 20, 1997, and continued in school, graduating from grade 12 in 2001.

The Respondent wrote the Appellant’s parents on July 31, 1996 that although the Appellant qualified for EDBs under the Schedule, these benefits were not payable until she was sixteen.

Subsection 15(1) of the Schedule states that:

(1) An insured person who sustains an impairment as a result of an accident is entitled to a weekly education disability benefit if the insured person meets the following qualifications:
The insured person,

i. was less than sixteen years of age at the time of the accident,

ii. was enrolled on a full-time basis in elementary, secondary or post-secondary education at time of the accident, or

iii. completed his or her education less than one year before the accident and was not employed, after completing his or her education and before the accident, in an employment that reflected his or her education and training.

The insured person, as a result of and within two years of the accident,

i. suffers a substantial inability to continue his or her education, in the case of an insured person who qualifies under subparagraph i or ii of paragraph 1,

ii. suffers a substantial inability to engage in employment that reflects his or her education and training, in the case of an insured person who qualifies under subparagraph iii of paragraph 1, or

iii. suffers a partial or complete inability to carry on a normal life, in the case of an insured person who qualifies under subparagraph i, ii or iii of paragraph 1. [emphasis added]

The Appellant claims EDB entitlement pursuant to subsection 15(1) of the Schedule on the basis that at the time of the accident she was less than sixteen years old and/or was enrolled on a full-time basis in elementary education and, in accordance with subparagraph 15(1)2iii, suffered “a partial or complete inability to carry on a normal life” as a result of and within two years of the accident.

Subsection 15(2) of the Schedule provides that:

(2) Subject to subsections (3) and (4), the weekly education disability benefit is payable during the period that the insured person suffers,

(a) a substantial inability to continue his or her education, in the case of an insured person who qualifies under subparagraph i of paragraph 2 of subsection (1);

(b) a substantial inability to engage in employment that reflects his or her education and training, in the case of an insured person who qualifies under subparagraph ii of paragraph 2 of subsection (1); or

(c) a partial or complete inability to carry on a normal life, in the case of an insured person who qualifies under subparagraph iii of paragraph 2 of subsection (1). [emphasis added]

Subsection 15(3) states that:

(2) No weekly education disability benefit is payable under this section,

(a) for any period before the insured person attains sixteen years of age; or

(b) for the first week of disability. [emphasis added]

Subsection 15(4) provides that:

If an insured person qualifies for weekly education disability benefits under subparagraph iii of paragraph 2 of subsection (1) and does not qualify under subparagraph i or ii of paragraph 2 of subsection (1), no weekly education disability benefit is payable under this section more than 104 weeks after the insured person first qualified for weekly education disability benefits unless the insured person is suffering a complete inability to carry on a normal life as a result of the accident.

[emphasis added]

Paragraph 21(1)4 of the Schedule states that:

(1) Subject to subsections (7) to (9), an insurer shall promptly deliver a written offer to an insured person with respect to the payment of weekly loss of earning capacity benefits if one or more of the following circumstances occurs:
The insured person qualified for weekly education disability benefits under section 15 and, 104 weeks after the onset of the disability in respect of which he or she first qualified for those benefits or on the date the person attains sixteen years of age, whichever occurs later, continues to qualify for weekly education disability benefits.

Some three years post-accident but shortly before the Appellant turned sixteen, by letter to the Appellant’s parents dated August 23, 1999 and entitled “Notice of Stoppage of Weekly Benefit,” the Respondent advised that although the Appellant qualified for EDBs, she had not been entitled to EDBs until she turned sixteen. The Respondent further advised that based on the medical information on file, the Appellant was not suffering either a complete inability to carry on a normal life or a substantial inability to continue her education.

The first issue before the Arbitrator arising out of the Application for Arbitration received by the Commission on December 14, 2005 was whether, when the Appellant turned sixteen on November 19, 1999, the EDB disability test was a partial or a complete inability to carry on a normal life.

The Arbitrator held that the appropriate EDB disability test was a complete inability to carry on a normal life. He found that subsection 15(4) referred to qualifying under subsection 15(1) without reference to the date from which benefits must be paid under subsection 15(3). If the Legislature had intended to link the 104-week period to payments rather than to disability or had intended that disability not be measured from the time of the accident, it would have stated that.

The Arbitrator also found that having a higher disability threshold was consistent with the denial of EDBs to insured persons who are less than sixteen. Putting the stricter test in abeyance until the insured turns sixteen would delay, rather than deny benefits. Had the Legislature intended to delay, rather than deny benefits, it would have stated that.

The second issue before the Arbitrator was:

If the test of disability for EDBs was a complete inability to carry on a normal life, was Ms. Eldridge entitled to an LECB offer at the time she turned sixteen, and if so, was the test for an LECB offer a partial or complete inability to carry on a normal life, pursuant to section 21(4) of the Schedule?

The Arbitrator held that the Appellant was not entitled to an LECB offer when she turned sixteen. Referring to the appeal decision in Gray and Zurich Insurance Company, (FSCO P98-00047, June 11, 1999), the Arbitrator found that an insurer was not required to make an LECB offer in circumstances where it stopped paying weekly benefits.

II. ANALYSIS

The legislative intent regarding EDBs, specifically in view of its link with LECBs, was in significant measure to compensate potential loss of employment income.

Accordingly, EDBs as compensation, in part, for one’s impairment preventing, delaying or restricting entry into the work force, was available only once an insured turned sixteen. This dovetailed with the Education Act, R.S.O. 1990, c. E.2, which at the time of this accident provided that:

(1) Unless excused under this section,

(a) every child who attains the age of six years on or before the first school day in September in any year shall attend an elementary or secondary school on every school day from the first school day in September in that year until the child attains the age of sixteen years; and

(b) every child who attains the age of six years after the first school day in September in any year shall attend an elementary or secondary school on every school day from the first school day in September in the next succeeding year until the last school day in June in the year in which the child attains the age of sixteen years.

The questions in this appeal, simply put, are:

is it correct that unlike an adult, the Appellant, being a minor under fourteen at the time of this accident, when first entitled to payment of weekly benefits at age sixteen would be required to immediately meet the complete inability to carry on a normal life test?
is it correct that to be entitled to any LECB whatsoever, the Appellant would have to, again, meet the complete rather than the partial inability to carry on a normal life test?

The complete inability test is extremely stringent, defined under section 3 of the Schedule as “an impairment that continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident.”

The essence of the Appellant’s argument is that the words “first qualified” for weekly EDBs found in subsection 15(4) is not an abstract determination. It is a real determination of actual entitlement. The Concise Oxford Dictionary, Eighth Edition (Oxford: Clarendon Press, 1990), defines “qualify” as “make legally entitled” and “satisfy the conditions or requirements.” As EDBs are not payable until an insured reaches age sixteen, one does not qualify until that time and, hence, the 104-week period under subsection 15(4) does not begin to run until one is sixteen. Hence, the Appellant would be eligible for weekly EDBs for the two years following her sixteenth birthday if she met either the partial or the complete inability test.

In Gray, Delegate Draper noted that the key term in subsections 7(1) for IRBs, 15(1) for EDBs, 18(1) for CGBs and 19(1) for ODBs is “entitlement.” Delegate Draper found that:

s. 18(1) is better viewed as a triggering provision, identifying those who are entitled to be considered under the caregiver provisions ... Similarly, subsections 7(1), 15(1) and 19(1) are triggering provisions for the other weekly benefits. The insured person’s entitlement to receive benefits, and to continue receiving them, depends on other provisions dealing with various factors affecting entitlement, including the relevant disability test.

Delegate Draper held that the Schedule “is directed at the prompt and regular payment of accident benefits, not abstract determinations of entitlement.”

At the appeal hearing, I posed the following hypothetical situation:

Let us suppose that there are three insured persons in identical circumstances at the time of a motor vehicle accident, other than they are different in age, namely one is sixteen (less a week), one has just turned 15 and one is 12. All apply for EDBs pursuant to subclause 15(1)(2)(iii) of the Bill 164 Schedule, all having identical impairments. As I understand the Arbitration decision herein, if all three immediately had the requisite level of disability, as a result of subsection 15(4), their potential consideration under the “partial inability to carry on a normal life” would be, respectively, 103 weeks, 52 weeks and zero weeks … in deciding whether this was the legislative intent, what, if any, role do the Human Rights Code, R.S.O. 1990, chap. H.19, and the Canadian Charter of Rights and Freedoms have in this determination.

The Respondent argues that the words “first qualified” in paragraph 15(1)4 of the Schedule encompass only the qualifications set out in subsection 15(1) and exclude the restriction in clause 15(3)(a) that weekly EDBs are not payable before the insured person reaches sixteen. At the same time, the Respondent argues that the words “continues to qualify” in paragraph 21(1)4 encompass not merely the qualifications in subsection 15(1) but also the restriction in subsection 15(4) that weekly EDBs are not payable after 104 weeks unless the insured is suffering a complete inability to carry on a normal life, where one qualified for EDBs under subparagraph 15(1)2iii.

I am not persuaded that the word “qualified” can be restricted in subsection 15(4) to the qualifications of subsection 15(1), ignoring when benefits are payable under subsection 15(3), yet be expanded in paragraph 21(1)4 to mean one must continue to meet not merely the qualifications of subsection 15(1) but also that the benefit must be payable under subsection 15(4).

Both subsection 15(3) and 15(4) use the identical words “no weekly education disability benefit is payable,” to set out the circumstances when EDBs are not payable, notwithstanding an insured meets the qualifications set out in subsection 15(1).

The words in subsection 15(4) “104 weeks after the insured person first qualified for weekly

disability benefits,” in my view, refer back to the initial condition at the beginning of that provision, namely that the insured person qualified for EDBs under the subparagraph 15(1)2iii partial or complete inability test and did not qualify under subparagraphs 15(1)2i and ii. Hence, the link is 104 weeks after the insured person first qualified under subparagraph 15(1)2iii.

Section 1 of the Human Rights Code states that “[e]very person has a right to equal treatment with respect to services, goods, and facilities, without discrimination because of,” amongst other things, age. Subsection 22, however, entitled “Restrictions for insurance contracts, etc.” states that:

The right under sections 1 and 3 to equal treatment with respect to services and to contract on equal terms, without discrimination because of age, sex, marital status, family status or disability, is not infringed where a contract of automobile, life, accident or sickness or disability insurance or a contract of group insurance between an insurer and an association or person other than an employer, or a life annuity, differentiates or makes a distinction, exclusion or preference on reasonable and bona fide grounds because of age, sex, marital status, family status or disability.

The majority in the Supreme Court of Canada decision in Zurich Insurance Co. v. Ontario (Human Rights Commission), 1992 CanLII 67 (SCC), [1992] 2 S.C.R. 321, upholding a decision of the Ontario Court of Appeal that differentiation in automobile rates based upon age, sex and marital status was reasonable and bona fide, found that “[t]he determination of insurance rates and benefits does not fit easily within traditional human rights concepts.” In any event, section 10 of the Human Rights Code defines age as eighteen years or more.

When a minor reached age sixteen and more than two years had passed since the motor vehicle accident, the Legislature may have been content, where the insured did not or no longer suffered a substantial inability to continue his or education, to restrict EDB entitlement itself to situations where the insured person was suffering a complete inability to carry on a normal life. EDBs themselves, of course, are not the appropriate avenue to address the potential for loss of earning capacity resulting from an accident and Bill 164, as noted above, had eliminated tort recovery for such pecuniary losses. Thus section 20 of the Schedule provides that LECBs are payable instead of EDBs, if authorized by Part VI, which includes paragraph 21(1)4.

The Appellant argued, in part, for a declaration that she was entitled to an LECB offer on July 12, 1998, being two years post-accident. This is not supportable, as the Appellant was not yet sixteen, as required by paragraph 21(1)4 of the Schedule. Nor am I persuaded by the Appellant’s argument that section 20.1, added to the Schedule by O. Reg. 26/06, now gives her automatic entitlement to an LECB offer.

Section 20.1 states that the LECB sections 21 to 25 of the Schedule apply only if certain conditions were met before March 1, 2006. If the conditions were not met and sections 21 to 25 are indeed inapplicable, it is difficult to see how the Appellant would be entitled to an LECB offer at all. However, in this case the requisite conditions were met: the Respondent refused to pay weekly EDBs under section 15 by letter dated August 23, 1999, the Respondent had not made an LECB offer, there was no agreement under section 24 or 25 and the arbitration proceeding was commenced December 13, 2005.

Similar to subsection 15(4), paragraph 21(1)4 begins with a prerequisite that the insured person qualified for weekly EDBs.

Paragraph 21(1)4 further requires that the insured “continues to qualify” for weekly EDBs. It does not require that the insured person must continue to qualify for payment of weekly EDBs to merit an LECB offer. If that were the case, no minor under age 14 at the time of the accident, allowing for the 104 week time period in paragraph 21(1)4, would be entitled to LECBs because at the point the LECB offer is first applicable at age sixteen, no EDBs had been previously payable under subsection 15(4).

Hence, the words “continues to qualify for weekly education disability benefits” must refer back to the qualifications of subsection 15(1). One cannot simply choose to exclude from the meaning of “qualify” in paragraph 21(1)(4) the “payable” provision of subsection 15(3) regarding pre-age sixteen eligibility and simultaneously include in the definition the “payable” provision of subsection 15(4) post-104 week eligibility.

To decide otherwise would be to ignore the legislative context of a “trade-off” of compensation rights, whereby in exchange for the elimination of tort recovery for pecuniary losses, more expansive first party benefits were introduced by the Legislature. These benefits included monetarily capped compensation for those whose injuries might impact either partially or completely on future earning capacity.

It is also consistent with the comments of Laskin J. in Bapoo v. Co-operators General Insurance Company, 1997 CanLII 6320 (ON CA), 36 O.R. (3d) 616, that "[a]voiding unjust or unacceptable results is an essential part of the court's task in interpreting statutory language." It would be unjust and unacceptable for a minor, the most vulnerable part of society with the longest potential period of future economic loss, in these circumstances to be required to establish that one’s impairment “continuously prevents the person from engaging in substantially all of the activities in which the person ordinarily engaged before the accident,” before being eligible for any LECB.

Gray pertained to CGBs, not to EDBs. At page six of the decision the triggering test for an LECB offer regarding EDBs is set out as either substantial inability to continue one’s education or complete inability to carry on a normal life. In Gray, the arbitrator had found that Ms. Gray had not met the complete (or the partial) inability test, therefore, the LECB provisions were never triggered.

As noted above, referring to Gray, the Arbitrator found that an insurer was not required to make an LECB offer where it stopped paying weekly benefits. However, the Appellant could still dispute the Respondent’s decision not to pay weekly benefits. If it was determined in arbitration that the Respondent was required to pay weekly benefits at the 104-week mark, that determination would then trigger the LECB process. The Respondent would then have to make an LECB offer based on the Appellant’s current situation. This approach was also taken by Delegate Draper in Canadian General Insurance Group and Zehr, (FSCO P99-00010, June 11, 1999). In this case, of course, the Respondent never stopped paying weekly benefits, because it never started paying weekly benefits.

The Arbitrator further held that the validity of the Respondent’s notice of stoppage was not within the scope of the preliminary issue hearing and was to be determined. However, in his decision, the Arbitrator did not answer the question before him whether the applicable disability test for an LECB offer was a partial or a complete inability to carry on a normal life.

Delegate Draper also stated in Gray that although not essential to his decision, it was his view that an insured person’s entitlement to an LECB offer would be based not on looking back to the 104-week mark, but to the date the arbitrator found that the insured person continued to qualify for weekly benefits. This is contrary to the intent of the legislation, as set out in section 21, that an insurer shall “promptly” deliver a written LECB offer if the prerequisites of one or more of the enumerated circumstances are met.

It is also contrary to the criterion in paragraph 21(1)4 that the question whether the insured person continues to qualify for EDBs is the later of 104 weeks after the onset of the disability in respect of which the insured first qualified for those benefits or on the date the person attains sixteen years of age. A third option is not provided.

I am also persuaded that the significance of the 104 weeks prerequisite under Part VI is not reflective of a legislative intent to restrict benefits by creating additional or more stringent disability tests and administrative procedures. Rather, the significance of 104 weeks is simply to allow a reasonable period for injuries to plateau prior to determining a possible LECB.

In conclusion, I find that the Arbitrator did not err in law in holding that when the Appellant turned sixteen, to use the precise words of subsection 15(4), no EDB was payable unless she was suffering a complete inability to carry on a normal life.

Regarding LECB entitlement, I find, to answer the question put to the Arbitrator, that the test for an LECB offer pursuant to paragraph 21(1)4 was either a partial or a complete inability to carry on a normal life at the time the Appellant turned age sixteen. This matter is remitted to arbitration for a determination of this question.

V. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).