Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2014 ONFSCDRS 40

FSCO A10-003775

BETWEEN:

ANTHONY FRANCIS

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Richard Feldman

Heard: January 8, 2014

Appearances: Bryan Rumble for the Applicant Joyce Tam for the Insurer

Background:

The parties agree upon the following facts:

The Applicant was born on December 13, 1991¹
The Applicant was involved in a motor vehicle accident (the “accident”) on June 1, 1996
At the time of the accident, the Applicant was enrolled in junior kindergarten
As a result of injuries sustained in the accident, the Applicant applied for and received various accident benefits from the Insurer
At the time of this accident, the accident benefit regulation in place was Ontario Regulation 776/93 (“Bill 164” or “the Schedule”)²
On March 1, 2006, Bill 164 was amended by Ontario Regulation 26/06
On March 1, 2006, the Applicant was 14 years old

Unique to Bill 164 was a type of benefit known as “Loss of Earning Capacity Benefits” (“LECBs”). These benefits were an “attempt to provide compensation for individuals who sustained a permanent reduction in the ability to earn income”.³ LECBs were intended to “compensate for the loss of competitive advantage or earning differential claim that would have formerly been brought under the tort system”.⁴

The LECB provisions were contained in Part VI (sections 20 through 35) of the Schedule. LECBs were a weekly benefit payable during the lifetime of the insured person but the amount was subject to adjustment from time to time, in accordance with the provisions of Part VI. Before being eligible for LECBs, a person must first have qualified for at least one of the following weekly benefits (which I shall call the “prerequisite benefits”):

income replacement benefits (under Part II);
education disability benefits (under s. 15);
caregiver benefits (under Part IV); or
other disability benefits (under Part V).

The person would also have to have been authorized to receive payment of LECBs under Part VI (i.e., the person must qualify for one of the prerequisite benefits and satisfy specified eligibility criteria set out in Part VI of the Schedule).

Typically, where one or more of the circumstances listed under section 21 occurred (usually where a person qualified for one of the prerequisite benefits for a specified period of time), the Insurer was obliged to provide notice to the insured person about any right he or she might have to elect to receive LECBs and the Insurer was obliged to make an LECB offer to the insured person. In the absence of an agreement, this would then trigger a sequence of events aimed at determining the correct amount of the LECBs. This process often included a complex and lengthy assessment of the insured person by a Designated Assessment Centre (DAC).

At the time of this accident, the Applicant was four years old. Obviously, he was not employed and would not qualify for income replacement benefits. He was also obviously not the primary caregiver of another person and would not qualify for caregiver benefits. He could conceivably have qualified for other disability benefits (“ODBs”) under Part V but the Applicant is not alleging that he would have qualified for such benefits. The Applicant is taking the position that he would have qualified for weekly education disability benefits (“EDBs”) under s. 15. Under subsection 15(3) of the Schedule, however, EDBs are not payable for any period before the insured person attains sixteen years of age.

On March 1, 2006 (the date Bill 164 was amended), the Applicant was 14 years old. As of March 1, 2006:

the Applicant had not claimed weekly EDBs or any of the other prerequisite benefits;
the Insurer had not refused to pay to the Applicant weekly EDBs or any of the other prerequisite benefits;
the Applicant had not claimed LECBs and the Insurer had made no offer with respect thereto nor had any agreement been made between the Applicant and the Insurer with respect thereto;
no arbitration proceeding under section 282 of the Insurance Act or under the Arbitration Act, 1991 and no court proceeding was commenced in accordance with subsection 279(1) of the Insurance Act in respect of the Applicant's entitlement to weekly EDBs or any of the other prerequisite benefits.

Although Bill 59 replaced Bill 164 as of November 1, 1996, the provisions of Bill 164 continued to apply for people (like Mr. Francis) who were involved in an accident that occurred after December 31, 1993 and before November 1, 1996. Effective March 1, 2006, however, Bill 164 was amended by Ontario Regulation 26/06. In addition to effectively eliminating DACs, this regulation made specific changes to portions of Part VI (the Part dealing with LECBs). For the purposes of this proceeding, the most important amendment was the addition of section 20.1 to the Schedule, which reads as follows:

20.1 Sections 21 to 25 apply only if, before March 1, 2006,

(a) the insurer has refused to pay weekly income replacement benefits under Part II, weekly education disability benefits under section 15, weekly caregiver benefits under Part IV or weekly disability benefits under Part V;

(b) the insurer has not made an offer with respect to the payment of weekly loss of earning capacity benefits under section 21 and there is no agreement under section 24 or 25; and

(c) an arbitration proceeding under section 282 of the Act or under the Arbitration Act, 1991 or a court proceeding has been commenced in accordance with subsection 279(1) of the Act in respect of the insured person's entitlement to a benefit referred to in clause (a).

It is agreed that, in this case, the conditions set out in section 20.1 of the Schedule have not been satisfied.

The Applicant turned 18 on December 13, 2009. It appears that he then made a claim for ODBs in the amount of $185.00 per week from December 13, 2007 (the date he attained the age of sixteen) onwards. He referred that issue (amongst others) to mediation at the Financial Services Commission of Ontario (FSCO). According to a Report of Mediator dated November 24, 2010, that issue was not resolved at mediation. On or about December 2, 2010, the Applicant filed an application for arbitration seeking non-earner benefits in the amount of $185.00 per week from December 13, 2009 onwards (plus interest, expenses and a special award). The Insurer filed a Response on or about January 21, 2011, in which it raised as a defence the fact that non-earner benefits are not a type of benefit available under Bill 164. At the pre-hearing discussion on June 20, 2011, the Applicant apparently clarified that what he was really seeking was weekly EDBs pursuant to s. 15 of the Schedule or LECBs pursuant to s. 20 of the Schedule (plus interest and expenses).

I do not know whether the Applicant ever made a claim for EDBs or LECBs that was denied by the Insurer and whether that denial was ever mediated at FSCO. It is therefore not clear to me whether FSCO has the jurisdiction to arbitrate the Applicant's current claims.⁵ There does not appear to have been any objection by the Insurer to this amendment to the claim by the Applicant and the Insurer did not raise any jurisdictional issues in the hearing before me. Therefore, for the purposes of this preliminary issue hearing, I shall assume (without deciding) that FSCO has the jurisdiction to arbitrate all claims made by the Applicant, as identified in the pre-hearing letter of Arbitrator Kominar dated June 21, 2011.

The Insurer takes the position, however, that since the conditions set out in section 20.1 of the Schedule have not been satisfied, the Applicant is barred from making a claim for LECBs. The parties are asking that this issue be decided as a preliminary matter.

Issue:

The preliminary issue in this hearing is:

Does section 20.1 of the Schedule prevent the Applicant from receiving Loss of Earning Capacity Benefits pursuant to Part VI of the Schedule?

Result:

Section 20.1 of the Schedule prevents the Applicant from receiving Loss of Earning Capacity Benefits pursuant to Part VI of the Schedule.

DISCUSSION

Position of Parties - Summary

The Insurer takes the position that one cannot make a claim for LECBs without complying with eligibility criteria in section 21 of the Schedule. According to the Insurer, as of March 1, 2006, section 21 through 25 only apply if the conditions set out in section 20.1 have been satisfied. It is undisputed that those conditions have not been satisfied in this case. Therefore, it is submitted, the Applicant cannot pursue a claim for LECBs.

The Applicant takes two alternative positions with respect to this issue. First, it is submitted on behalf of the Applicant that although sections 21 through 25 of the Schedule do not apply (since the conditions in section 20.1 have admittedly not been satisfied), the Applicant may still be entitled to LECBs pursuant to the remaining provisions of Part VI of the Schedule. Second (and in the alternative), if section 20.1 of the Schedule effectively deprives the Applicant of the ability to claim LECBs, it violates the Applicant’s rights under section 15 of the Charter⁶ (i.e., discrimination on the basis of age) and, it is urged, the appropriate relief to grant under section 24 of the Charter is to declare that section 20.1 of the Schedule does not apply in this case.

Statutory Interpretation

There is no question that, following the March 1, 2006 amendments, Part VI of the Schedule became more complex. The amendments, however, did not eliminate LECBs for all persons who were involved in an accident after December 31, 1993 and before November 1, 1996. For example, the March 1, 2006 amendments do not affect the rights of an insured person who was receiving LECBs prior to March 1, 2006.⁷ Section 27.1 (the transitional provisions) also preserved the rights of an insured person who, prior to March 1, 2006, had received an LECB offer or had entered into an agreement with the insurer under section 25. Finally, section 20.1 of the Schedule preserves the rights of an insured person (viz. LECBs) who, prior to March 1, 2006, had commenced a formal arbitration or court proceeding over his or her entitlement to one of the prerequisite benefits.

The Applicant submits that sections 21 through 25 are procedural, not substantive. It is submitted that these sections relate to the offer and acceptance process and the procedural rights and obligations of the parties pending receipt of the DAC report. It is further submitted that if it was the intent of the legislature to disqualify persons who did not meet the criteria set out in section 20.1 from being able to claim LECBs, it would have been clearer had section 20.1 made reference to all of the LECB provisions (i.e., to Part VI) rather than to only a few of the sections contained within Part VI.

The Applicant submits that the Insurance Act (and regulations thereunder) is consumer protection legislation⁸ that ought to be given broad and liberal interpretation and that any ambiguity ought to be construed in favour of insured persons.⁹ Counsel for the Applicant cites the modern rule of statutory interpretation from Driedger on the Construction of Statutes, 3^rd edition:¹⁰

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of the proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aides. In other words the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.

It is also pointed out on behalf of the Applicant that there is a presumption against interpreting a statute or regulation as retroactively taking away substantive rights of parties in the absence of clear language to this effect.

The main problem with the Applicant’s position, as pointed out by the Insurer, is that sections 21 through 25 are not just procedural. Section 20 states that an insurer shall pay an insured person LECBs instead of one of the prerequisite benefits if the payment of LECBs “is authorized by this Part”. Section 20 does not indicate when payment is authorized. The circumstances under which an insured person is entitled to an LECB offer (which was the first step in receiving LECBs) is contained in section 21. In other words, the test for entitlement to LECBs is found in section 21. Without section 21, there is no other provision anywhere in the Schedule to indicate under what circumstances payment of LECBs is authorized.

I have no “external aides” to assist me in determining why the legislature might have chosen in 2006 to make unavailable one type of benefit (LECBs) for some but not all of those who were involved in an accident after December 31, 1993 but before November 1, 1996. If there were two or more possible interpretations, in the face of ambiguity, it is likely that the interpretation that favoured insured persons would be preferred. Nevertheless, this is not a situation where I must choose between two or more plausible interpretations. There is only one interpretation of the relevant portions of the Schedule that makes any sense. Without section 21, there is no test for eligibility to LECBs. Thus, I conclude that section 20.1 took away the right to LECBs (by removing sections 21 through 25) for those who, prior to March 1, 2006, had not yet received an LECB offer or made an agreement under s. 25 (except for those who had been denied one of the prerequisite benefits and who, prior to March 1, 2006, commenced proceedings to challenge that denial).

As this Applicant has not met the conditions set out in section 20.1, sections 21 to 25 do not apply to him. Without those sections, payment of LECBs to the Applicant is not authorized under Part VI of the Schedule. Thus, section 20.1 of the Schedule prevents the Applicant from receiving Loss of Earning Capacity Benefits pursuant to Part VI of the Schedule.

Section 15 of the Charter

(a) Notice of Constitutional Question

Pursuant to section 109 of the Courts of Justice Act¹¹ and Rule 80 of the Dispute Resolution Practice Code, the Applicant was required to serve notice of his constitutional question on the Insurer and upon the Attorney General of Canada and the Attorney General of Ontario. I am satisfied that this was done in this case.¹² Neither Attorney General chose to intervene in this proceeding.¹³

(b) Jurisdiction of FSCO (re constitutional question and relief sought)

It is uncontested that FSCO possesses the jurisdiction to hear and determine the constitutional issue being raised by the Applicant. It is also uncontested that FSCO possesses the jurisdiction to grant the relief being sought. Case law supports this.¹⁴ For the purposes of deciding constitutional issues, FSCO is a “court” of competent jurisdiction and I find that I do have the jurisdiction to deal with the issues that have been raised by the parties in this proceeding.

(c) Section 1 of the Charter

Section 1 of the Charter provides that the Charter “guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” The Insurer argues that section 20.1 of the Schedule does not violate the Applicant’s rights under section 15 of the Charter. The Insurer is not taking the position that section 20.1 can be “saved” as a “reasonable limit [that] can be demonstrably justified in a free and democratic society.” That is, the Insurer has advised that it is not relying upon section 1 of the Charter in this case.

(d) The Law

Subsection 15(1) of the Charter states that:

Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability. (emphasis added)

Subsection 24(1) of the Charter states that:

Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances.

In Law v. Canada (“Law”),¹⁵ the Supreme Court of Canada explained that, in analysing whether there has been discrimination contrary to section 15 of the Charter, a purposive and contextual approach is required (rather than application of a fixed and limited formula). The Court then listed a number of contextual factors that could be considered (at para. 88). Unfortunately, the factors listed in Law began to be applied by lower courts rather mechanically,¹⁶ ignoring the Supreme Court’s warning to avoid the application of any one, rigid formula.

When the Supreme Court had the opportunity to revisit this issue more recently,¹⁷ it enunciated the following two-part test for assessing a claim under subsection 15(1) of the Charter:

(1) Does the law create a distinction that is based on an enumerated or analogous ground? and

(2) Does the distinction create a disadvantage by perpetuating prejudice or stereotyping?

The claimant must establish that he or she has been denied a benefit that others are granted (or carries a burden that others do not), by reason of a personal characteristic that falls within the enumerated or analogous grounds of s. 15(1). It is not necessary to pinpoint a mirror comparator group. Provided that the claimant establishes a distinction based on one or more of the enumerated or analogous grounds, the claim should proceed to the second step of the analysis.

At the second step, the question is whether, having regard to all relevant factors, the distinction the law makes between the claimant group and others discriminates by perpetuating disadvantage or prejudice to the claimant group, or by stereotyping it.

According to the Supreme Court of Canada in Withler, the first way that substantive inequality, or discrimination, may be established is by showing that the impugned law, in purpose or effect, perpetuates prejudice or disadvantage to members of a group on the basis of personal characteristics within s. 15(1):¹⁸

Perpetuation of disadvantage typically occurs when the law treats a historically disadvantaged group in a way that exacerbates the situation of the group.

The second way that substantive inequality may be established is by showing that the disadvantage imposed by the law is based on a stereotype that does not correspond to the actual circumstances and characteristics of the claimant or claimant group:¹⁹

Typically, such stereotyping results in perpetuation of prejudice and disadvantage. However, it is conceivable that a group that has not historically experienced disadvantage may find itself the subject of conduct that, if permitted to continue, would create a discriminatory impact on members of the group. If it is shown that the impugned law imposes a disadvantage by stereotyping members of the group, s. 15 may be found to be violated even in the absence of proof of historic disadvantage.

Thus, subsection 15(1) of the Charter does not protect individuals against all different or unequal treatment; rather it is aimed at preventing discrimination.²⁰

(e) Analysis

Does section 20.1 of the Schedule create a distinction that is based on an enumerated or analogous ground?

I find that section 20.1 of the Schedule does not create a distinction that is based on an enumerated or analogous ground that is protected under section 15 of the Charter. The wording of section 20.1 of the Schedule does not explicitly exclude people based upon their age nor is the effect of section 20.1 restricted to young persons.

As previously stated, after the March 1, 2006 amendments to Bill 164, access to LECBs depended upon whether one or more prerequisite benefits had been claimed by an insured person and, if such benefit(s) had been denied by the insurer, whether the insured person commenced proceedings to challenge that denial prior to March 1, 2006. Section 20.1 makes no reference to the age of the insured person.

Since, however, EDBs are not payable before the age of 16, there may be a class of young persons who, like Mr. Francis, were involved in accidents after December 31, 1993 and before November 1, 1996 and who did not reach the age of 16 prior to March 1, 2006. Realistically, such persons could not have applied for EDBs prior to March 1, 2006, such benefits could not have been denied and proceedings over entitlement to the prerequisite benefit(s) could not have been commenced prior to March 1, 2006. Thus, it is argued, as a result of his age, Mr. Francis could not meet the criteria set out in section 20.1 and the effect of section 20.1 (if not its intent) is to discriminate against Mr. Francis and young persons who are similarly situated.

The effects of section 20.1, however, are not restricted to young persons. There could be persons (of various ages) who were denied one or more of the prerequisite benefits and who did not commence proceedings to challenge that denial prior to March 1, 2006. There could be persons (of various ages) who originally qualified for one or more of the prerequisite benefits but did not qualify for those benefits for a long enough period as of March 1, 2006 to have been entitled to an LECB offer; section 20.1 would effectively prevent them from claiming LECBs, regardless of their age. The Insurer, in its factum, lists some other possible scenarios in which insured persons of various ages would be prevented by section 20.1 of the Schedule from advancing a claim for LECBs as a result of the situation that existed as of February 28, 2006. The Insurer’s argument, which I accept, is that the effect of section 20.1 is determined by the circumstances that existed as of February 28, 2006 and not by the personal characteristics of insured persons.

Does section 20.1 of the Schedule perpetuate prejudice or stereotyping?

I have concluded that section 20.1 of the Schedule does not create a distinction that is based on an enumerated or analogous ground that is protected under section 15 of the Charter. Even if I were wrong about this, however, the Applicant still cannot succeed because I find that section 20.1 of the Schedule does not discriminate against the Applicant by perpetuating disadvantage or prejudice to an identified group (of which the Applicant is a member) or by stereotyping members of that group.

First, there is no evidence that young people are a historically disadvantaged group. Second, there is nothing in the language or effect of section 20.1 that suggests that young people are less worthy or deserving of accident benefits or perpetuates any stereotypes about young people.

There is no doubt that the effect of section 20.1 is to deprive Mr. Francis of access to a particular type of accident benefit (LECBs) because it effectively discontinued that type of benefit before he became old enough to claim it (or even claim the prerequisite benefit that might, later, have given rise to the right to claim LECBs). The inability to claim LECBs may have a significant impact upon Mr. Francis, financially or otherwise. This may simply be the unfortunate and possibly unintended result of the government’s policy decision to phase out LECBs as of a particular date for all persons in Ontario, with only a few, enumerated exceptions. Mr. Francis does not fit within one of those exceptions.

Although the negative impact upon the Applicant of section 20.1 of the Schedule may be significant, that does not necessarily mean that it is unconstitutional. I find that section 20.1 of the Schedule does not violate Mr. Francis’ rights under section 15 of the Charter. Section 20.1 does not create a distinction based upon age and it does not perpetuate prejudice or stereotyping.

CONCLUSION:

For the reasons set out above, I find that section 20.1 of the Schedule prevents the Applicant from receiving Loss of Earning Capacity Benefits pursuant to Part VI of the Schedule.

March 18, 2014

Richard Feldman Arbitrator

Date