Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 15
Appeal P07-00018
OFFICE OF THE DIRECTOR OF ARBITRATIONS
AXA INSURANCE (CANADA)
Appellant
and
MICHAEL KERNAGHAN
Respondent
BEFORE:
Director’s Delegate Lawrence Blackman
REPRESENTATIVES:
Mr. David Murray for the Appellant, AXA Insurance (Canada)
Mr. Richard J.T. Shaheen for the Respondent, Mr. Kernaghan
HEARING DATE:
January 25, 2008
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal is dismissed and Arbitrator Murray's order dated May 17, 2007 is confirmed.
Director’s Delegate Makepeace’s July 25, 2007 order staying payment of interest is hereby revoked.
The matter is remitted to Arbitrator Murray for a determination of entitlement to and the quantum of the legal expenses of the arbitration proceeding, should the parties be unable to resolve those issues.
If the parties are unable to agree on the legal expenses of this appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.
February 4, 2008
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND AND THE NATURE OF THE APPEAL
The Agreed Statement of Facts herein delineates that the Respondent, Mr. Michael Kernaghan, was born on April 11, 1984. On June 26, 2002, he graduated with an Ontario Secondary School Diploma from Glendale High School in Tillsonburg, Ontario. On May 30, 2003, at approximately 7:00 a.m., Mr. Kernaghan started his first day of work on a farm in Courtland, Ontario, catching and moving turkeys between barns. At 12:56 p.m. that day, while returning from lunch, Mr. Kernaghan was injured in a motor vehicle accident. Mr. Kernaghan was 19 years old. The parties agree that since this accident, Mr. Kernaghan has suffered a complete inability to carry on a normal life.
Mr. Kernaghan applied to the Appellant, AXA Insurance (Canada) (“AXA”) for statutory accident benefits payable under the Schedule.1 Arbitrator Murray (the “Arbitrator”), in her May 17, 2007 decision, states that pursuant to paragraph 12(1)(1) of the Schedule, AXA paid Mr. Kernaghan non-earner benefits (NEBs) of $185 a week. Paragraph 12(1)(1) provides that NEB entitlement requires that an insured (1) suffer a complete inability to carry on a normal life as a result of and within 104 weeks of the accident and (2) does not qualify for income replacement benefits (IRBs).
Paragraph 12(7)(a) provides that an insurer is not required to pay NEBs for the first 26 weeks after the onset of the complete inability to carry on a normal life.
Mr. Kernaghan submits that pursuant to subsection 12(3) and subparagraph 12(1)(3)(ii) of the Schedule, he is entitled to an NEB of $320 a week ongoing from May 31, 2005 (that is, from 104 weeks after the onset of the disability). Entitlement to this enhanced benefit requires, in the circumstances herein, that the Insured must:
(a) have completed his education less than one year before the accident; and,
(b) have not been employed, after completing his education and before the accident, in an employment that reflected his education and training.
A three-day arbitration hearing was held before the Arbitrator in February 2007 as to whether Mr. Kernaghan met the latter criteria. The Arbitrator determined, in her May 17, 2007 decision, that Mr. Kernaghan was entitled to $320 per week ongoing from May 31, 2005, together with interest pursuant to subsection 46(2) of the Schedule on the outstanding weekly benefit.
AXA appeals this decision. It submits that the Arbitrator’s award should be set aside, that the Application for Arbitration be dismissed with the legal costs of both the arbitration and the appeal payable to the Appellant, and that the additional benefits paid pursuant to the Arbitrator’s decision be repaid forthwith.
The issue in this appeal is, succinctly, whether the jobs performed by the Respondent during the period in question reflect his education and training. The Respondent submits that the appeal raises issues of fact or issues of mixed law and fact. Section 282 of the Insurance Act, R.S.O. 1990, c. I.8 (as amended), provides that any party to an arbitration may appeal the arbitrator’s order on a question of law. The Respondent argues that the appeal should be dismissed as the issues raised on the appeal are not issues of law. The Appellant concedes, at paragraph 82(b) of its factum, that “[s]uitability of employment is in every case a question of fact.”
The Divisional Court decision in General Accident Assurance Co. of Canada v. Singh, [2001] O.J. No. 2524 held that the Director’s Delegate in that case had lost jurisdiction when she embarked upon a question of mixed fact and law, and confined the Director’s Delegate, at the new hearing, to determining mere questions of law.
The restriction of appeals to matters of law reflects, in my view, legislative recognition that judicial resources are limited, that deference should be given to the skills and expertise of first-level adjudicators and that the need for a speedy, simplified and inexpensive dispute resolution system necessitates a narrowed basis for appeal. This 1996 legislative change confirms that arbitrations are not dress rehearsals; appeals are not a “second kick at the can.”
The Appellant’s 58-page factum raises several issues arising from the 18-page arbitration decision. The Respondent provides a 37-page reply. To a not insignificant degree, this appeal reflects dissatisfaction with the Arbitrator’s findings of fact and the application of the law to those facts. I agree with the Respondent that “this is not an opportunity to retry the case in front of a new trier of fact.”
However, there is an underlying issue of law raised by the Appellant as to what is meant by the words in subparagraph 12(1)(3)(ii) “employment that reflected his or her education and training.” I find that the Appellant is endeavouring to rewrite that provision so as to import additional, unnecessarily complicated and expensive evidential requirements which the ordinary meaning of the words in question do not require, and which would defeat the purpose of this provision. For this reason, I find that the appeal must fail.
II. ISSUES OF LAW AND ANALYSIS
The Appellant argues that the Arbitrator erred in her interpretation of subparagraph 12(1)(3)(ii) and the proper legal test which satisfies that provision.
The Appellant submits that subparagraph 12(1)(3)(ii), as set out in Antony and RBC General Insurance Company, (FSCO P03-00023, July 22, 2004), is directed towards someone who has just finished school and remains underemployed at the time of the accident. AXA further states that entitlement on the basis of prospective education and training is not contemplated or allowed under this provision; it is only the education that the insured already possessed that should be considered. The Appellant states that the Arbitrator appears to have accepted this proposition.
The Appellant also states that the Arbitrator accepted that the Respondent had the onus of proving that his employment in the period between completing his education to the time of the accident did not reflect his education and training.
Where the Appellant says the Arbitrator erred, as more specifically set out below using the Appellant’s headings, includes:
(a) her determination of the Respondent’s education and training;
(b) her analysis of the question of what was required for an employment to reflect that education and training; and,
(c) her application of the evidence to the correct legal standard.
(a) Did the Arbitrator misapprehend the evidence and the Appellant’s submissions as to whether Mr. Kernaghan had completed his education?
Although raised in its written submissions as one basis for its appeal, at paragraph 95 of its factum, AXA concedes that “Mr. Kernaghan[had] completed his education at the time of the accident.” The parties agree that Mr. Kernaghan completed his education on June 26, 2002 and that the accident took place on May 30, 2003. The parties agree that this is less than one year. Accordingly, it is agreed that Mr. Kernaghan meets the first criteria under subparagraph 12(1)(3)(ii).
In oral submissions, AXA stated that this issue was moot. I am not persuaded that there was any error of law regarding the Respondent having completed his education less than one year before the accident, which, in any event, I find to be a finding of fact.
(b) Did the Arbitrator err in her determination of the Respondent’s education and training?
The Appellant argues that the Arbitrator erred in law in finding that Mr. Kernaghan had a basic secondary school education with an emphasis in art. AXA submits that this finding of fact is taken from the testimony of Ms. E. Menard. Ms. Menard is a certified vocational evaluator who was retained by the Appellant. At paragraph 55 of its factum, the Appellant writes that:
Overall it was Ms Menard’s opinion that at the time of the accident Mr. Kernaghan had acquired a basic secondary school education with an emphasis on art and computer/media studies suggesting a trajectory related to art or computer art with potential for study at the community college level.
The Appellant submits that as the Arbitrator rejected Ms. Menard’s evidence elsewhere in her decision, she could not rely on this aspect of Ms. Menard’s evidence, at least without giving reasons for so doing. The Appellant further argues that the Arbitrator’s finding was an error in law as it was based on conjecture, irrelevant information, unsupported inferences and/or the complete absence of supporting evidence.
I agree with the Respondent that as the sole finder of fact, the Arbitrator may accept some of a witness’ testimony while rejecting or placing less weight on other parts.The Arbitrator, at page 15 of her decision, gave reasons why she placed little weight on Ms. Menard’s evidence.
The Arbitrator found that the Respondent had a basic secondary school education. This is not disputed. The Agreed Statement of Facts sets out a number of courses taken by the Respondent in the areas of fine arts, visual arts, drawing and art and technology. There was certainly a basis to determine that there was an emphasis of study in this area. I am not persuaded that the Arbitrator erred in determining the Respondent’s education and training. In any event, I find that this issue raises a question of fact, not a question of law.
(c) Did the Arbitrator err in her determination of the legal standard required for “an employment” to reflect an applicant’s “education and training” as well as in her application of the evidence to that standard?
The Appellant submits that subparagraph 12(1)(3)(ii) applies only where the employment between the completion of one’s education and training and the motor vehicle accident bears little or no relationship to the types of jobs the insured person could have reasonably obtained with one’s education and training.
The Appellant argues that the Arbitrator erred in law:
by focusing on the requirements of the jobs in question rather than the abilities of the Respondent, which is contrary to the public policy behind the provision;
by requiring the job to employ all of a person’s education and training before it can be said that it reflects the person’s education and training;
by failing to acknowledge or ignoring evidence; and,
in rejecting or failing to address the testimony of Ms. Menard.
The Agreed Statement of Facts sets out that between the completion of his education and the time of the accident, Mr. Kernaghan was employed in four different jobs. The first, from August 15 to October 31, 2002, was full-time night shift employment with Annex Publishing & Printing Inc. (“Annex”) earning $7.50 an hour transferring newspapers to and from a machine that secured the newspapers together.
The second position was with Wellmaster Pipe and Supply Inc. (“Wellmaster”) from February 22 to April 17, 2003 (when the Respondent was laid off) as an iron worker, earning $9.24 to $10.05 per hour. Mr. Kernaghan’s duties consisted of operating a machine that cut metal into pieces, reading specifications for the metal pieces on blue prints, setting specifications on the machine and carrying metal to and from the machine. On occasion, Mr. Kernaghan was required to weld metal together. Arbitration Exhibit 5 includes a November 24, 2006 letter from Mr. Doug White of Wellmaster stating that Mr. Kernaghan was hired as “a seasonal temporary labourer,” together with 25 to 50 others, and that “the best workers with the potential to be trained are invited to stay on and eventually become full time regular employees.”
The Respondent worked for one day on May 14, 2003 with Cedarcrest Wood Products Ltd. (“Cedarcrest”) as a furniture manufacturing labourer.
On May 30, 2003, the day of the accident, Mr. Kernaghan began a job working at a turkey farm catching and moving turkeys between barns.
In its written submissions, AXA argued that contrary to the Arbitrator’s findings of fact, the jobs at Annex and the turkey farm implicitly required the use of English in addition to the use of a vehicle or a piece of machinery and that the job at Cedarcrest required a level of woodworking ability. AXA further submits that as there was evidence that Mr. Kernaghan was required to undergo some additional form of training at Wellmaster, the job must be seen as consistent with and reflective of his prior education and training. The Appellant also argues that the fact that Mr. Kernaghan obtained only the four jobs set out above is compelling evidence that those were the best jobs he could find with his existing skill set and as such, were reflective of his education and training.
In its oral submissions, the Appellant was more explicit regarding the basis of this appeal. The question to be answered is not simply whether the insured’s employment during the requisite period “reflected his or her education or training,” as the provision might suggest. Rather, the question is whether the insured person could have attained a better level of employment with the skills he or she brought to the labour market.
AXA submits that the onus was on the Respondent to prove, on a balance of probabilities, that there were better jobs that he “could have got” with his education and training. Given the Respondent’s alleged failure to provide evidence in this regard, he could not be said to be underemployed and, therefore, his application should have failed. The Appellant appears astounded at the Arbitrator’s decision given that the only expert evidence before her was that of Ms. Menard, who testified that Mr. Kernaghan’s jobs were the type of jobs that Grade 12 students get, “because that is all they can get.”
In essence, the Appellant submits that subparagraph 12(1)(3)(ii) is about marketability.
I asked the Appellant whether this meant that if a nuclear physicist, brain surgeon or lawyer immigrates to Canada and the best obtainable job is driving a taxi cab, does that mean that driving a taxi cab reflects his or her education and training? The Appellant unhesitatingly answered yes. It was incumbent, it was argued, to look at the “economic reality” and one’s “marketable” skills. “Education and training in and of itself is not the issue.” The issue is whether one’s education and training qualified one, in that time and place and in that labour market, for a better job than what one actually got. Further, this being an area of specialized knowledge, the trier of fact can not take judicial notice of what employment might reflect one’s education and training.
With respect, I find that education and training in and of itself is the issue.
Firstly, that is what the provision says.
Secondly, I find that what the provision recognizes, as stated by Brockenshire J. in Walker v. Ritchie, 2003 CanLII 17106 (ON SC), [2003] O.J. No. 18, is that those who have recently graduated will not forever engage in the activities of students, that “eventually” they will get jobs “commensurate with their education.”
I agree that subparagraph 12(1)(3)(ii) is applicable where an insured can be properly characterized as being underemployed, one’s employment not being reasonably approximate to one’s education and training. Although the Schedule is generally retrospective, this provision provides an exception, recognizing that in the circumstances provided there is potential for higher earnings for an insured person and that it would be unfair to lock an insured person into his or her economic circumstances shortly after completing one’s education. Accordingly, a modest supplemental increase in weekly benefits is allowed, and only after a two-year waiting period.
I disagree with the Appellant’s written submission that the word “reflect,” in the context of subparagraph 12(1)(3)(ii) means “to turn or direct in a certain course.” Respectfully, while that definition may apply to heat, light or sound, it does not apply to education. Rather, I find that the appropriate meaning in this context is “mirror,” “exemplify,” or as stated by Brockenshire J, be “commensurate” with their education and training.
Although partially marked “unintelligible,” Ms. Menard’s testimony at pages 21 to 23 (the stenographer being sworn in accordance with subsection 22(3) of the Insurance Act) supports the proposition that subparagraph 12(1)(3)(ii) acknowledges that it takes some time for a graduating student to obtain employment that reflects one’s education and training.
The Appellant concedes, at paragraph 61 of its factum, that is was Ms. Menard’s evidence that as of the accident date, Mr. Kernaghan had not yet established a stable work record. I find the purpose of subparagraph 12(1)(3)(ii) is to avoid locking an insured into a minimal IRB or NEB payment when one has the misfortune of not only being in a motor vehicle accident but also having an accident at a point in one’s life when limited work experience may give one limited marketability.
Ms. Menard testified at question #208 that “catching turkeys and transferring turkeys from one barn to another” was “consistent with the education and training of a grade 12 student.” As with an insured’s cab driving reflecting one’s education and training as a nuclear physicist, this is logical only if one rewrites subparagraph 12(1)(3)(ii) as follows:
. . . an employment that reflected the marketability of his or her education and training in the economic realities of the relevant time and location.
Such a rewriting of the legislation would, amongst other things, significantly complicate an otherwise straightforward provision, and indeed, as submitted by the Appellant, make it incumbent on individuals (who may be living on $185 a week) to retain labour market experts. I am not persuaded that this was the intent of the legislation.
I am not persuaded that the Arbitrator misinterpreted subparagraph 12(1)(3)(ii), that she required a job to employ all of one’s education and training before it could be said the employment reflected one’s education and training or (if, indeed, that is indeed within my jurisdiction) that she misapplied the law to the facts of this case in finding that Mr. Kernaghan’s employment between completing his education and the date of the accident did not reflect his education and training.
I find that the Arbitrator properly focused on the job requirements of the Respondent’s employment as well as his education and training. I agree with the Arbitrator’s statement that the “question is not whether a person can do a job.” Nor is the question what employment the Respondent could obtain.
The Agreed Statement of Facts describes various courses taken by the Respondent. As an example, Mr. Kernaghan’s Grade 12 Mathematics for Technology course covered the following:
Real numbers, powers and radical; polynomials and rational expressions equations; properties of geometric figures; trigonometry; forces and vectors; analystic geometry; annuities and mortgages;
Mr. Kernaghan’s Grade 12 Communication Technology covered:
Application and expansion of theoretical knowledge, skills acquired in previous communications classes, electronic theory, animation, autocad, 3D studio videomaster, script writing, story board development, final edit.
In the Agreed Statement of Facts’ recitation of Mr. Kernaghan’s high school courses, I see no evidence of any education or training in woodworking or metal shop classes. Rather, his high school education was in general arts and sciences, which is not reflected in any of his jobs during the relevant period, including binding newspapers and chasing turkeys.
The Arbitrator’s decision enumerated the Respondent’s high school course work, specifically the emphasis on art, which overall, were his highest marks. She found that Mr. Kernaghan’s high school education “bore little reflection to the jobs he had between graduating from high school and the accident.” There was a logical basis for this finding, supported by the evidence before the Arbitrator. The Respondent’s employment between completing his education and the accident was essentially unskilled or minimum skilled labour positions, at or near minimum wage, sometimes seasonal in nature, for which knowledge of English was not necessarily required and for which there was no evidence that a high school diploma was a pre-requisite.
I agree with the Respondent’s submission that the limited training received at Wellmaster did not serve to negate Mr. Kernaghan’s prior education and training. To decide otherwise would mean that any on-the-job training received by an insured person would render irrelevant their prior education and training.
I find that, overall, the Appellant’s arguments, if accepted, would essentially vitiate subparagraph 12(1)(3)(ii). To accept the argument that since these are the only jobs the Respondent obtained, they must reflect his education and training, would be to determine that subparagraph 12(1)(3)(ii) has no meaning. As stated by the Supreme Court of Canada in Consolidated Bathurst Export Ltd. and Mutual Boiler & Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888:
It is trite to observe that an interpretation of an ambiguous contractual provision which would render the endeavour on the part of the insured to obtain insurance protection money nugatory, should be avoided.
In any event, I do not find the words in question ambiguous. If, however, they were, they should be interpreted in accordance with the Access to Justice Act, 2006, S.O. 2006, c. 21 that "[a]n Act shall be interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects" and 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."
The Respondent, although not appealing the Arbitrator’s decision, argued that she erred in law by considering Mr. Kernaghan’s entire employment between completing his education and the accident, rather than solely his employment at the time of the accident. Given my decision, it is not necessary to address this argument.
(d) Did the Arbitrator err in concluding that the evidentiary record established that the Respondent met the test for benefits under subparagraph 12(1)(3)(ii)?
The Appellant submits that:
(a) the Respondent had the onus to provide sufficient evidence to satisfy his burden of establishing, on a balance of probabilities, that the employment in which he was engaged
between graduation and the accident did not reflect his education and training;
(b) it was incumbent on the Respondent to lead evidence regarding each job as to why it did not reflect his education and training;
(c) the only evidence led as to whether these jobs were consistent with the Respondent’s education and training was that of Ms. Menard, who testified that they were; and,
(d) the Arbitrator erred in concluding that the Respondent had met his burden.
I am not persuaded that the Arbitrator erred in law. There was significant evidence before the Arbitrator in addition to that of Ms. Menard. As noted, there is an extensive Agreed Statement of Facts which includes Mr. Kernaghan’s high school marks, a description of the courses he took, and details of his high school and post high school employment.
The Appellant argued that the ultimate question of whether the Respondent’s post accident employment reflected his education and training was not one an arbitrator could make in the absence of expert evidence. In the absence of any expert opinion supporting the Respondent’s position, AXA submitted that it was an error in law for the Arbitrator to have found in Mr. Kernaghan’s favour.
I find that this is a fundamental misunderstanding of the role of experts. The Supreme Court of Canada, in R. v. Mohan, 1994 CanLII 79 (SCC), [1994] 2 S.C.R. 7, stated that:
. . . experts [should] not be permitted to usurp the functions of the trier of fact. Too liberal an approach could result in a trial's becoming nothing more than a contest of experts with the trier of fact acting as referee in deciding which expert to accept.
The Arbitrator had sufficient evidence before her to determine that the employment in which the Respondent was engaged did not reflect his education and training. I am not persuaded that the Arbitrator, in failing to relinquish her statutory duties as trier of fact to Ms. Menard, erred in law.
(e) Did the Arbitrator exceed her jurisdiction?
The Appellant states that prior to the start of the arbitration, it reclassified the Respondent’s weekly benefits as IRBs on the basis he did not qualify for NEBs under subsection 12(1) of the Schedule. AXA submits that the Respondent never disputed this termination. The Appellant argues that the Arbitrator exceeded her jurisdiction in deciding it was too late for AXA to raise the defense that Mr. Kernaghan was entitled to IRBs. Under subsection 12(1), such entitlement would disentitle Mr. Kernaghan to NEBs unless he qualified under subparagraph 12(1)(3)(ii).
The main issue identified by the Arbitrator in her decision was whether Mr. Kernaghan was entitled to receive a non-earner benefit of $320 per week pursuant to subsection 12(3) of the Schedule from May 31, 2005. Subsection 12(3) references the qualifying criteria of paragraph 12(1)(3). The Arbitrator addressed subparagraph (ii) thereof. The Appellant, in oral submissions, agreed that this was the proper issue before the Arbitrator. I find that nothing turns on this argument.
(f) Conclusion
As I am not persuaded that the Arbitrator erred in law, the appeal is hereby dismissed.
On the consent of both parties, the matter is remitted to Arbitrator Murray for a determination of entitlement to and the quantum of the legal expenses of the arbitration proceeding, should the parties be unable to resolve those issues.
As the appeal has been unsuccessful, the July 25, 2007 decision of Director’s Delegate Makepeace staying payment of interest is hereby revoked.
III. EXPENSES
I wish to thank and to commend both counsel for their most thorough preparation and engaging submissions, and for their courtesy and professionalism throughout.
If the parties are unable to agree on the legal expenses of this appeal, a hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.
February 4, 2008
Lawrence Blackman Director’s Delegate
Date