Neutral Citation: 2014 ONFSCDRS 147 FSCO A12-001025

BETWEEN:

J.K. Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Anne Sone Heard: October 22, 2013, at the offices of the Financial Services Commission of Ontario in Toronto. Final written submissions received June 2, 2014 Appearances: David Levy for J.K. Stephen B. Macaulay for Wawanesa Mutual Insurance Company

Introduction:

The Applicant, J.K., was injured in a motor vehicle accident on August 13, 2008. He applied for statutory accident benefits from Wawanesa Mutual Insurance Company (“Wawanesa”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and J.K. applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Preliminary Issue:

The preliminary issue is:

Is J.K. precluded from receiving income replacement or housekeeping and home maintenance benefits pursuant to subsection 30(2) and/or 30(4) of the Schedule?

Result:

J.K. is precluded from receiving income replacement or housekeeping and home maintenance benefits, from August 13, 2008 up to and including September 20, 2010, by the operation of subsection 30(4) of the Schedule.
Any amounts that Wawanesa was holding in trust for J.K for income replacement or housekeeping and home maintenance benefits, from August 13, 2008 up to and including September 20, 2010, shall be returned to Wawanesa, by the operation of subsection 30(4) of the Schedule.
J.K is not precluded from receiving income replacement or housekeeping and home maintenance benefits after September 20, 2010.

EVIDENCE AND ANALYSIS:

Overview:

On August 13, 2008, J.K was seriously injured in a motor vehicle accident. His injuries are described in a decision of Arbitrator Sampliner pertaining to attendant care benefits.² Wawanesa accepts that he is catastrophically impaired.

Arising out of the accident, J.K. was charged with two counts of dangerous driving causing bodily harm under section 249 of the Criminal Code (CC) on August 13, 2008.

On July 8, 2010, J.K. pled guilty to the first count, and the second count was withdrawn.

On September 20, 2010, Mr. Justice Tetley found J.K. guilty of dangerous driving, but granted him a conditional discharge. As a result, J.K. was placed on probation for three years, and he was also prohibited from driving for five years.

Relevant sections of the Schedule:

Under subparagraph 30(2)(c)(i):

(2) The insurer is not required to pay an income replacement benefit, … or [housekeeping and home maintenance] benefit

(c) in respect of a person who, at the time of the accident,

(i) was engaged in an act for which the person is convicted of a criminal offence…[emphasis added]

Under subparagraphs 30(4)(a), (c) and (d):

(4) If a person sustains an impairment as a result of an accident and,

(a) at the time of the accident, the person was engaged in … an act for which the person is charged with a criminal offence;

the insurer shall hold in trust any amounts payable under an income replacement benefit, … or a [housekeeping and home maintenance] benefit …, until the charge is finally disposed of, at which time the amounts (and any income on the amounts)

(c) shall be returned to the insurer, if the person is found guilty of the offence …; or

(d) shall be paid to the person entitled to the payment, if the person is not found guilty of the offence …. [emphases added]

Evidence:

Probation Order:

J.K.’s Probation Order states in part:

…J.K. … hereinafter called the offender, was found guilty or convicted on the charge(s)…: Dangerous operation motor vehicle … causing bodily harm.

It also sets out the terms and conditions of his probation.

Expert Reports regarding whether being “found guilty” is the same as a “conviction”

Opinion of Edward Prutschi

J.K. obtained a report dated September 17, 2013 from Edward Prutschi. His report states that since his call to the bar in 2000, his practice has been restricted to criminal law. He also states that he has:

argued trials and appeals at every level of court in Ontario
provided training to numerous professional organizations, including instructing in the Law Society of Upper Canada Bar Admissions course
appeared regularly as an expert commentator for various news media.

In his report, Mr. Prutschi states at page 2 that:

The Criminal Code, under certain circumstances and for certain offences, permits a sentencing judge to decline entering a conviction against an offender even though he or she may have been found guilty. In lieu of the formal conviction, a discharge is granted. This process is set out in section 730(1) of the Criminal Code.

Mr. Prutschi states that subsection 730(3) of the CC makes it abundantly clear that a discharge does not constitute a conviction. Subsection 730(3) of the CC says:

Where a court directs under subsection (1) that an offender be discharged of an offence, the offender shall be deemed not to have been convicted of the offence [emphasis added]

Pertaining to J.K’s case, Mr. Prutschi opines that despite the subsequent use of the “found guilty” language in subsection 30(4) of the Schedule, a plain reading of paragraph 30(2)(c) requires that “a criminal conviction must be registered before a person is subject to this general exclusion.” [emphasis in original]

He also suggests that government passed the discharge provisions of the CC to alleviate some of the disproportionately harsh consequences that automatically follow after a formal criminal conviction for offenders with little or no previous criminal history, who are found guilty of a relatively minor offence.

He further states that it is clear from the documented history of J.K.’s criminal case that Mr. Justice Tetley found that J.K. deserved the ameliorative benefits of the discharge provision, and was also satisfied, (as required by section 730 of the CC), that a discharge instead of a conviction was in J.K.’s best interest and not contrary to the public interest. In Mr. Prutschi’s opinion, one of these ameliorative benefits of the discharge is the continued eligibility to receive benefits under an insurance policy.

Opinion of Leonard Hochberg

Wawanesa obtained a report dated October 10, 2013 from Leonard Hochberg of Hochberg Trial Lawyers. In essence, Mr. Hochberg agrees with Mr. Prutschi that J.K.’s being found guilty, and receiving a conditional discharge, does not mean he was convicted of an offence under the CC.

At page 2 of his report, he states:

[J.K.] took responsibility for dangerous driving [by pleading guilty] and was found guilty by the court. In spite of this, he was given a conditional discharge so he does not suffer a conviction and the stigma of a criminal record.

Wawanesa’s Submissions:

Wawanesa submitted that J.K. was precluded from receiving income replacement or housekeeping and home maintenance benefits (the benefits) because:

under subparagraph 30(2)(c)(i) of the Schedule, at the time of the accident J.K. was engaged in an act for which he was convicted of a criminal offence, and
under paragraphs 30(4)(a), (c) and (d) of the Schedule, J.K. was engaged in an act for which he was found guilty of a criminal offence
any other interpretation gives insufficient attention to legislative intent and the need to avoid absurdity.

Wawanesa also referred me to various presumptions of statutory interpretation, such as the legislature’s presumed:

knowledge and linguistic competence
avoidance of tautology (superfluous or meaningless words)
consistent expression
use of different words for different meanings.

Although the legislature could have changed the wording of “found guilty” in subsection 30(4) to accord with the wording of “convicted” in the new subsection 30(2), it did not do so. Instead, it kept the words “found guilty” in subsection 30(4). Therefore, according to Wawanesa, the exclusion set out in paragraph 30(4)(c) is triggered, and J.K. is precluded from receiving the benefits.

Wawanesa invited me to follow the Director’s Delegate’s reasoning in McDonald and Guarantee Company of North America,³ in order to avoid what would otherwise be an absurd result. In addition, Wawanesa submitted that Beattie v. National Frontier Insurance Company⁴ is distinguishable from this case because the legislature amended section 30 of the Schedule following Beattie.

J.K.’s Submissions:

J.K. submitted that:

Under paragraph 30(2)(c) of the Schedule, the insurer is not required to pay an income replacement benefit or a housekeeping and home maintenance benefit to a person who at the time of the accident was engaged in an act for which the person is convicted of a criminal offence; since there was no conviction, we never get to the procedure set out in subsection 30(4) of the Schedule.
If the legislature intended that to make the finding of guilt the basis for the exclusion from benefits, it would have done so; instead, it chose to make conviction the exclusion of benefits, and there was no conviction.

Analysis:

Case Law and Legislative History:

McDonald and Guarantee Company of North America

In McDonald⁵, the Applicant pled guilty and was convicted of assault in connection with a parking lot altercation (where he fell from a moving truck). He subsequently applied for income replacement benefits. Guarantee relied on the exclusion provisions of subsections 30(4) and (5) of the Schedule, relating to situations where the automobile was being used for an act for which the person was charged with a criminal offence, to deny income replacement benefits and seek repayment of benefits it had already paid.

The Arbitrator reviewed the history of this legislation. He also looked in detail at the trust provision set out in subsection 30(4). That provision applies where a person sustains an impairment as a result of an accident. He noted that a further condition is set out in paragraph 30(4)(a), which requires that at the time of the accident, the person was engaged in “an act for which the person is charged with a criminal offence.”

If those conditions are met, then the insurer “shall hold in trust any amounts payable” under an income replacement benefit. Under paragraphs 30(4)(c) and (d), “until the charge is finally disposed of”, (meaning after trial and any appeals), the amounts⁶ are either:

(d) paid to the person entitled to the payment, if the person is not found guilty of the offence.

The Arbitrator saw nothing in section 30 (Part IX, the General Exclusions provisions of the Schedule), that “speaks to any benefits owing for the period after the charge was finally disposed of.” As a result, he found that since the Schedule does not specifically provide that Mr. McDonald is disentitled to benefits after his charge was finally disposed of, it follows that he is not precluded from receiving income replacement benefits because of the application of subsections 30(4) and (5) of the Schedule.

Guarantee appealed this result. On appeal, the Director’s Delegate overturned the Arbitrator’s decision, on the basis that the Arbitrator gave insufficient attention to legislative purpose and the need to avoid absurdity.⁷

Beattie v. National Frontier Insurance Company

In Beattie, Mr. Beattie was severely injured in an accident, and was subsequently convicted of dangerous driving. Until the charge was finally disposed of, National Frontier held his weekly benefits in trust. After his conviction, National Frontier denied Mr. Beattie’s application for benefits on the grounds that his conviction for dangerous driving was a bar to his entitlement to benefits under the Schedule.

A motions court judge held that Mr. Beattie’s entitlement to benefits under the Schedule was not excluded by subsection 30(4), except for the period after he was charged and before he was convicted. The insurer appealed and the insured cross-appealed from this ruling.

In Beattie, Borins J.A. of the Ontario Court of Appeal agreed with the motions court judge and dismissed the appeal. (In doing so, he chose not to follow the Director’s Delegate’s decision in McDonald.) He found that the legislative purpose of section 30, when read as a whole, is to exclude an insured person injured in an accident to entitlement to certain benefits under the Schedule where the stipulated circumstances apply to the injured person.

Subsection 30(4) excludes the insurer from its obligation to pay benefits to a person charged with a criminal offence only for the period from when the person is charged until he or she is found guilty. This results in that person being entitled to payment of benefits, subsequent to being found guilty, for whatever period he or she is entitled to receive those benefits.

The Ontario Court of Appeal held that although subsection 30(4) does not conform with the purpose of section 30 (as evidenced by subsection 30(1) and (2), in that it does not totally exclude the insurer’s statutory obligation to pay weekly benefits to an insured person convicted of a criminal offence), this does not result in an absurdity capable of resolution by resorting to recognized principles of statutory interpretation.

The Court found that subsection 30(4), although not furthering the legislative intent, is clear and unambiguous. Even though an interpretation that leads to absurd consequences should be rejected in favour of an interpretation that avoids absurdity, the court cannot do so if, as in this case, there is no plausible alternative interpretation.

Borins J.A. stated that in all likelihood, subsection 30(4) represents an example of drafting oversight. He further stated that legislation is presumed to be accurate and well-drafted consequent to the presumption that the legislature does not make mistakes. Thus, if the words of an Act are clear, they must be followed even though they lead to a manifest absurdity.⁸

After the Beattie case, subparagraph 30(2)(c)(i) was added to the Schedule. It states that an insurer is not required to pay an income replacement or a housekeeping benefit to a person who (at the time of the accident) was engaged in an act for which he or she is convicted of a criminal offence.

I note that at the time this amendment to the Schedule was introduced, it was recorded in Hansard that someone injured in a vehicle while using it to commit a criminal offence will not be entitled to benefits such as income replacement or housekeeping and home maintenance. It was also stated that “These measures return accountability to Ontario drivers.”⁹

What are the applicable Rules of Statutory Interpretation?

In the first chapter of Sullivan on the Construction of Statutes,¹⁰ Professor Ruth Sullivan analyzes Elmer Driedger’s modern principle in the approach to statutory interpretation. The modern principle states:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.¹¹

Professor Sullivan explains that the “modern principle has been cited and relied on in innumerable decisions of Canadian courts, and in Re Rizzo & Rizzo Shoes Ltd. it was declared to be the preferred approach of the Supreme Court of Canada.”¹²

Professor Sullivan also discusses the plain meaning rule. She mentions that its proponents generally agree on the following propositions:

Upon reading a legislative text it is possible to determine the meaning of the text and whether it is plain or ambiguous.
If a text has a plain meaning, extra-textual evidence of legislative intent (like legislative history or presumed intent) is inadmissible to contradict that meaning. The plain meaning constitutes definitive evidence of legislative intent and it is impermissible to rely on other factors to contradict it. Furthermore, other factors may not be relied on to “create” ambiguity – that is, cast doubt on the meaning of a text that is otherwise plain.
If a text is ambiguous, interpretation is required. In interpretation, extra-textual factors such as legislative history and presumed intent may be relied on to resolve the ambiguity.¹³

Professor Sullivan states that when judges refuse to look at evidence of legislative intent on the grounds that the text is clear, they effectively rely on the plain meaning rule. (This appears to be what Borins J.A. has done in Beattie.)

At the end of chapter one, Professor Sullivan concludes that:

Texts are not either plain or ambiguous; rather they are more or less plain and more or less ambiguous. The factors that justify outcomes in statutory interpretation are multiple, involving inferences about meaning and intention derived from the text, non-textual evidence of legislative intent, specialized knowledge, common sense and legal norms. These factors interact in complex ways. …¹⁴

In other words, multiple factors need to be taken into account. In addition, plain meaning is very subjective and may depend on the individual reader’s background, experience, interpretation and so forth.

In its recent decision in Canadian Imperial Bank of Commerce (CIBC) v. Deloitte & Touche,¹⁵ the Ontario Court of Appeal noted that:

Discerning legislative purpose entirely from statutory language and then using that purpose to give meaning to statutory language can quickly become a circular exercise.¹⁶

At the beginning of the Beattie decision, Borins J.A. quotes from a previous edition of Sullivan and Driedger on the Construction of Statutes,¹⁷ as follows:

In a perfect world the legislature would create flawless legislation. Each statute would be drafted so that the effects of interpreting and applying it to an unfolding reality would match the goals sought by the legislature. In an imperfect world there is often a divergence between the purpose of legislation on the one hand and the effects of applying it on the other. The language of particular provisions may turn out to be over or under inclusive; there may be a lacuna in the legislative scheme.¹⁸

Borins J.A. then simply states: “That is what happened in this case …” As indicated above, he found that if the words of the statute are clear, they must be followed, even if they lead to a manifest absurdity.¹⁹

He also confirms that legislation is presumed to be accurate and well-drafted, and that there is a presumption that the legislature does not make mistakes.

Borins J.A. quotes Professor Sullivan’s analysis of why courts do not have jurisdiction to fill legislative gaps, as follows:

While courts are willing to correct drafting errors, they are reluctant to fill gaps in legislation. This reluctance is grounded in two factors. First, unlike mistakes, which are always inadvertent, a gap in legislation may be deliberate. Gaps may result from faulty drafting but equally they may result from factual misconceptions, poor planning or even a considered policy choice. For this reason, gaps are taken to embody the actual intentions of the legislature, which the courts are bound to respect. It is up to the legislature rather than the courts to effect any desired change. Second, whether inadvertent or not, gaps result from provisions or schemes that are under-inclusive, and correcting under-inclusiveness would require courts to legislate. …²⁰

Simply put, gaps may be a deliberate policy choice. Whether or not gaps are deliberate, it is up to the legislature, not the courts to correct them.

Findings:

Based on the above evidence and analysis, I find the following:

On September 20, 2010, Mr. Justice Tetley of the Ontario Court of Justice found J.K. guilty of dangerous driving, but granted him a conditional discharge. In addition, J.K.’s Probation Order states that he was “found guilty or convicted” of the charge of dangerous driving. Accordingly, I find that J.K. was found guilty of the charge of dangerous driving. [my emphasis]
Both parties’ experts opined that J.K.’s guilty plea and conditional discharge are not the same as being “convicted.” Accordingly, I find that J.K. was not convicted of dangerous driving.
The trial judge in this matter could have convicted J.K., but chose not to impose the penalties that a conviction would entail. He may have made this choice based on various factors, such as the fact that J.K. pled guilty, and saved the public the expense of a trial.
There could also be policy reasons for the legislature choosing to use different words in subsection 30(2) and subsection 30(4). For example, a guilty plea resulting in a conditional discharge should, arguably, not be subject to the same penalties as a conviction.
According to the rules of statutory interpretation, the legislature does not make mistakes and it is not appropriate for me to remedy a possible oversight by redrafting the legislation.²¹
Based on the Beattie case, the words of section 30 of the Schedule are clear enough that there is no ambiguity, and I should not engage in legislative drafting.
After Beattie, subparagraph 30(2)(c)(i) was added to the Schedule. This subparagraph states that an insurer is not required to pay an income replacement benefit or a housekeeping and home maintenance benefit to a person who at the time of the accident was engaged in an act for which the person is convicted of a criminal offence. Since I have found that J.K. was not convicted of a criminal offence, I find that this section does not apply to J.K.
Paragraph 30(4)(c) refers to an insurer holding the benefits in trust until the charge is finally disposed of, and provides a mechanism:
- to return these funds to the insurer if the person is found guilty of the offence; or
- to pay the person if he or she is not found guilty of the offence.

Since J.K. was found guilty of a criminal offence, I find that this section applies to J.K.

Conclusion:

By operation of subsection 30(4) of the Schedule, J.K. is precluded from receiving income replacement or housekeeping and home maintenance benefits, from August 13, 2008 up to and including September 20, 2010.

Under subsection 30(4) of the Schedule, any amounts that Wawanesa is holding in trust for J.K for income replacement or housekeeping and home maintenance benefits, from August 13, 2008 up to and including September 20, 2010, shall be returned to Wawanesa.

J.K. is not precluded from receiving income replacement or housekeeping and home maintenance benefits after September 20, 2010.

EXPENSES:

The parties did not provide any submissions regarding expenses in this matter. If they are unable to resolve this issue on their own, either party may, within 30 days, make a written request to me to determine the matter in accordance with Rules 75 through 79 of the Dispute Resolution Practice Code.

September 15, 2014

Anne Sone Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2014 ONFSCDRS 147 FSCO A10-001397