Anthony Francis v. Dominion of Canada General Insurance Company, 2015 ONFSCDRS 174

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 174

Appeal P14-00013

Appellant

and

Respondent

and

DIEGO MAENZA and

Intervenors

BEFORE:

David Evans

Bryan Rumble for Mr. Anthony Francis

Joyce Tam for Dominion of Canada General Insurance Company

Moira Gracey for Mr. Diego Maenza

Sharon Dagan for Wawanesa Mutual Insurance Company

HEARING DATE:

January 29, 2015

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

The Arbitrator’s order of March 18, 2014 is confirmed and this appeal is dismissed.
If the parties cannot agree on the legal expenses of this appeal, an expense hearing shall be requested, as set out below, within forty-five days of this decision.

August 31, 2015

David Evans Director’s Delegate

Date

I. NATURE OF THE APPEAL

This appeal by Anthony Francis concerns a change to the SABS–1994¹, in particular s. 20.1 effective March 1, 2006, and how it affects his right to claim accident benefits.

Mr. Francis appeals Arbitrator Feldman’s order of March 18, 2014, that s. 20.1 excludes him from claiming Loss of Earning Capacity Benefits (LECBs) under the SABS.

The intervenor Diego Maenza is involved in a similar dispute with his insurer, the intervenor Wawanesa Mutual Insurance Company.

Mr. Francis also appeals the Arbitrator’s order that this exclusion is not unconstitutional under 15(1) of the Charter,² the right to the equal protection and equal benefit of the law without discrimination based on, among other things, age.³

II. BACKGROUND

Anthony Francis was born on December 13, 1991. He was thus four years old and enrolled in junior kindergarten when he was injured in a motor vehicle accident on June 1, 1996. He was hospitalized for about four days and returned to senior kindergarten about a week after the accident.

Mr. Francis received accident benefits from Dominion of Canada General Insurance Company including case management assistance, rehabilitation assistance, speech language therapy and academic support.

After Mr. Francis turned 18, he applied for Other Disability Benefits (ODBs) under Part V of the SABS. These were denied, so Mr. Francis applied for mediation. The Report of Mediator dated 24 November 2010 indicates the parties were unable to resolve the ODB issue. The Commission then received the Application for Arbitration on 2 December 2010 regarding the ODBs.

However, at some point prior to the pre-hearing in the matter, Mr. Francis made a claim for educational disability benefits (EDBs) under s. 15 of the 1994 SABS. By way of background, s. 15(3) provides that EDBs are not payable before a person turns 16, so only in December 2007 did Mr. Francis become eligible to claim an EDB. He did not claim them until after the Application for Arbitration. The claim for EDBs is apparent from the pre-hearing brief for the arbitration prepared by Dominion. Dominion took the position in the brief that, while Mr. Francis was now eligible to claim EDBs, he did not qualify for them.

Prior to the pre-hearing, Mr. Francis also made a claim from Dominion for LECBs under Part VI (sections 20-35) of the 1994 SABS. LECBs replaced weekly benefits, like EDBs, by providing compensation for those who had sustained a permanent reduction in the ability to earn income. The process for claiming LECBs started with an LEC offer. Dominion’s position in its pre-hearing brief concisely states the issue that was before the Arbitrator:

The SABS–1994 was amended in 2006. S. 20.1 was added. That section provides that an insured person such as Anthony is only entitled to an LEC offer if before March 1, 2006, 3 conditions are met. One of the conditions precedent to an insured being entitled to an LEC offer is the requirement that an arbitration or court proceeding be commenced before March 1, 2006 in respect of an education disability benefit. [Emphasis in the original.]

Dominion submitted that Mr. Francis did not satisfy the requirements of s. 20.1 of the SABS–1994 and was therefore not entitled to an LEC offer.

Accordingly, the pre-hearing letter of June 21, 2011 lists as issue 1: “Is Mr. Francis entitled to receive a weekly education disability benefit pursuant to section 15 of the Schedule or a Loss of Earning Capacity benefit, pursuant to section 20 of the Schedule?”

The letter also notes that Mr. Francis planned to raise a constitutional challenge to aspects of the legislation involved in this case.

A preliminary issue hearing was then arranged before Arbitrator Feldman on the issue of whether s. 20.1 prevents Mr. Francis from receiving LECBs pursuant to Part VI of the SABS.

As the Arbitrator noted in his decision, he did not know if the issue was ever mediated, but since no objection was raised to this amendment to the claim, he assumed (without deciding) that FSCO had jurisdiction to arbitrate the claims in the pre-hearing letter. No jurisdictional issues were raised before me, either, so I proceed on the same assumption.

The Arbitrator dealt with the statutory interpretation of s. 20.1 and its constitutionality under s. 15 of the Charter.

With respect to statutory interpretation and Mr. Francis’ case in particular, s. 20.1 provides that ss. 21-25 of the SABS apply only if he had started an arbitration or court proceeding regarding EDBs before March 1, 2006. Section 21 contains the test for eligibility for LECBs. Mr. Francis only became eligible to claim EDBs when he turned 16 in December, 2007, and the arbitration proceeding regarding them did not commence until December 2010. He therefore did not meet the conditions of s. 20.1.

The Arbitrator concluded that s. 21 did not apply to Mr. Francis, and without s. 21, there is no test for eligibility to LECBs. Therefore, s. 20.1 took away the right to LECBs for Mr. Francis.

With respect to the constitutional issue, the Arbitrator noted that:

although both the Canadian and Ontario Attorneys General were advised of this issue, neither chose to intervene
he had jurisdiction to deal with this issue
Dominion was not relying on s. 1 of the Charter (the “saving” provision for a “reasonable limit [that] can be demonstrably justified in a free and democratic society”) but simply took the position that s. 20.1 of the SABS does not violate s. 15 of the Charter.

The Arbitrator applied the two-part test enunciated by the Supreme Court in Withler v. Canada (Attorney General), 2011 SCC 12. The first part of the test is whether the law creates a distinction based on an enumerated or analogous ground. The second part of the test is whether the distinction creates a disadvantage by perpetuating prejudice or stereotyping.

The Arbitrator concluded that “Section 20.1 does not create a distinction based upon age and it does not perpetuate prejudice or stereotyping” and is therefore not unconstitutional.

III. ANALYSIS

Statutory Interpretation

The starting point in this discussion is s. 20, and in particular s. 20(1), which provides that LECBs are only payable if the payment of LECBs is authorized by Part VI: “An insurer shall pay an insured person weekly loss of earning capacity benefits instead of … weekly education disability benefits under section 15… if the payment of loss of earning capacity benefits is authorized by this Part.” The authorization is set out in s. 21, which provides for the insurer’s initial offer of LECBS.

With respect to EDBs, s. 21(1)4 provides that, subject to criteria that do not apply here, an LECB offer only had to be made to Mr. Francis if he initially qualified for EDBs and still qualified when he turned 16. Thus, no offer had to be made under s. 21(1)4 to Mr. Francis before s. 20.1 was enacted, as he was not yet 16 upon its enactment, and s. 20.1 made s. 21(1)4 inapplicable to him thereafter.

The Arbitrator found that the provisions in ss. 21-25 are not just procedural, as Mr. Francis submitted. The Arbitrator noted that s. 20(1) itself does not indicate when payment is authorized, but rather the first step to authorizing LECBs is s. 21. The Arbitrator stated that “Without section 21, there is no other provision anywhere in the Schedule to indicate under what circumstances payment of LECBs is authorized.” The Arbitrator found no ambiguity in the provision, that there was only one interpretation of the relevant portions of the SABS that made any sense, and that “Without section 21, there is no test for eligibility to LECBs.” He concluded that as Mr. Francis did not meet the conditions in s. 20.1, ss. 21–25 did not apply to him and so could not authorize payment of LECBs to him. Therefore, s. 20.1 barred Mr. Francis from receiving LECBs.

I find that the Arbitrator’s statutory interpretation of the effect of s. 20.1 is correct. Since s. 20.1 provides that s. 21 does not apply to situations such as those Mr. Francis is in, there is no authorization to pay him LECBs.

Mr. Francis submits that the legislation would have been easier to understand if it had simply made all of Part VI inapplicable. However, doing so would have removed the benefit from the SABS for those receiving LECBs but who did not meet the additional three conditions of s. 20.1.

Mr. Francis submits that s. 21 is incorporated by reference into s. 20, thereby authorizing the LECBs. He relies on s. 15(b) of the Interpretation Act, R.S.O. 1990, c. I.11, which provides that, where an act is repealed and other provisions substituted, if there is a reference to the repealed Act in an unrepealed Act or regulation, the repealed Act or regulation is construed as unrepealed so far as necessary. However, the SABS was not repealed, but rather conditions were simply added to claims for LECBs. I find that provision of the Interpretation Act inapplicable.

Mr. Francis relies on the presumption against legislation taking away a vested right and refers to Dikranian v. Quebec (Attorney General), [2005] 3 SCR 530, 2005 SCC 73. However, the discussion in Dikranian itself shows that Mr. Francis had no vested right. Bastarache J. writing for the majority accepted the definition of a “vested right” as having two criteria: (1) the individual’s legal (juridical) situation must be tangible and concrete rather than general and abstract; and (2) this legal situation must have been sufficiently constituted at the time of the new statute’s commencement. Thus, the court in Dikranian stated at para. 39, “A court cannot therefore find that a vested right exists if the juridical situation under consideration is not tangible, concrete and distinctive. The mere possibility of availing oneself of a specific statute is not a basis for arguing that a vested right exists… In other words, the right must be vested in a specific individual.” Furthermore, the situation must also have materialized.

Mr. Francis puts great weight on the court’s statement in Dikranian that “rights and obligations resulting from a contract are usually created at the same time as the contract itself.” However, the context in Dikranian was quite different from that here. The parties had signed a loan repayment contract, and then the Quebec government changed the provisions of the contract by statute. Here, Mr. Francis’s right to LECBs was not fixed or crystallized, unlike in the loan contract, since he only had a right to LECBs if he still met the criteria for EDBs when he turned 16. This was an uncertain event in the future at the time of the amendment. I find its accrual was therefore conditional on certain events and so not vested: see 1392290 Ontario Ltd. V. Ajax (Town), 2010 ONCA 37.

Mr. Francis also relies on State Farm Mutual Automobile Insurance Company and Federico, (FSCO P12-00022, March 25, 2013), upheld on judicial review State Farm v. Federico, 2014 ONSC 109. However, that case dealt with a crystallized contractual right and the applicable interest rate after September 1, 2010, where the provisions at issue were also ambiguous and in conflict. I find Federico does not apply here because the rights of Mr. Francis had not crystallized and the provisions in question are unambiguous.

In passing, I note that Delegate Blackman considered s. 20.1 in Eldridge and AXA Insurance (Canada), (FSCO P07-00006, August 11, 2008), and stated that “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.”

Mr. Maenza, Intervenor, submits that the executive cannot take away legislated rights. However, the entire SABS is an exercise of executive power. The Insurance Act gives the executive a very broad power to amend the SABS as well as insurance contracts:

268(1) Every contract evidenced by a motor vehicle liability policy, including every such contract in force when the Statutory Accident Benefits Schedule is made or amended, shall be deemed to provide for the statutory accident benefits set out in the Schedule and any amendments to the Schedule, subject to the terms, conditions, provisions, exclusions and limits set out in that Schedule.

I have found that s. 20.1 does not interfere with vested rights. However, even if it did so, the presumption against interference with vested rights is a principle of statutory interpretation. As Delegate Blackman noted in Federico, to rebut the presumption against retroactive legislation, all that is required is some sufficient indication that the legislation is meant to apply not only to ongoing and future facts but also to facts that are past. I find that intention is manifest in s. 20.1.

Accordingly, I find that the Arbitrator was correct in finding that s. 20.1 precludes Mr. Francis from claiming LECBs. I will now turn to the constitutional issue.

Section 15 of the Charter

Subsection 15(1) of the Charter states:

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.]

The Arbitrator noted that in Withler v. Canada (Attorney General), 2011 SCC 12, the Supreme Court at para. 30 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?

Regarding the first part of the test, the Arbitrator noted that “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).”

The Arbitrator found that no such distinction was created because s. 20.1 “does not explicitly exclude people based upon their age nor is the effect of section 20.1 restricted to young persons.” He noted that s. 20.1 makes no reference to the age of the insured person and that its effects 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.

Accordingly, he accepted the Insurer’s argument “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.”

Mr. Francis submits that the Arbitrator relied on irrelevant considerations – namely, the effect of the legislation on others – in reaching that conclusion, since he is advancing a claim based on the discrimination against his class.

However, I find that the effect of the legislation on others is relevant in the context of social benefits legislation like the SABS. As the Supreme Court stated in Withler, “Where the impugned law is part of a larger benefits scheme, as it is here, the ameliorative effect of the law on others and the multiplicity of interests it attempts to balance will also colour the discrimination analysis.” Further, as was stated in Miceli-Riggins v. Canada (Attorney General), 2013 FCA 158, “distinctions arising under social benefits legislation will not lightly be found to be discriminatory. The Supreme Court has confirmed this over and over again… Accordingly, one cannot simply conclude there is a section 15 violation from the fact that social benefits legislation leaves a group, even a vulnerable group, outside the benefits scheme.” The court in Miceli-Riggins went on to say that “social benefits programs often are expressed in a complex web of interwoven provisions. Altering one filament of the web can disrupt related filaments in unexpected ways, with considerable damage to legitimate governmental interests.”

It should also be noted that while s. 20.1 removed the right of Mr. Francis to claim LECBs, it did not remove his right to claim EDBs, so he was not completely deprived of access to the SABS.

Accordingly, I find that the Arbitrator did not rely on irrelevant considerations when he determined that the effect of s. 20.1 is not discriminatory in the context of social benefits legislation like the SABS. I find that the Arbitrator was correct in finding that the claim of discrimination did not pass the first test under s. 15.

While the Arbitrator went on to consider the second step of the test and found that, even if there was a distinction it did not create a disadvantage by perpetuating prejudice or stereotyping, it is not necessary for me to consider the matter further. As the Supreme Court stated at para. 63 in Withler, “Provided that the claimant establishes a distinction based on one or more enumerated or analogous grounds, the claim should proceed to the second step of the analysis.” Since the claimant did not establish that distinction, it is not necessary to proceed to the second step.

Consequently, the decision is upheld and the appeal is denied.

IV. EXPENSES

If the parties cannot agree on the legal expenses of this appeal, the time for either party to request an appeal expense hearing under the Dispute Resolution Practice Code is extended to forty-five days from the date of this decision. The request shall be accompanied by a Bill of Costs and submissions on any disputed entitlement or quantum issues.

August 31, 2015

David Evans Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.
The Canadian Charter of Rights and Freedoms under The Constitution Act, 1982.
The intervenors participated only regarding s. 20.1.