Jozef Kazimierczuk v. Pembridge Insurance Company, 2016 ONFSCDRS 185

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

Neutral Citation: 2016 ONFSCDRS 185

FSCO A13-004784

BETWEEN:

JOZEF KAZIMIERCZUK

Applicant

and

PEMBRIDGE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Arbitrator Irvin H. Sherman, Q.C.

Heard:

In person at ADR Chambers on May 17, 2016

Appearances:

Mr. Roman Baber participated for Mr. Jozef Kazimierczuk

Mr. Brian Yung participated for Pembridge Insurance Company

Issues:

The Applicant, Mr. Jozef Kazimierczuk, was injured in an automobile accident on November 25, 2010, and sought benefits from Pembridge Insurance Company (“Pembridge”) pursuant to the Schedule.¹ The parties were unable to resolve their dispute through mediation, and the Applicant, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Hearing are:

Is Mr. Kazimierczuk entitled to receive a weekly income replacement benefit?
Is Mr. Kazimierczuk entitled to interest on the overdue payment of the weekly income replacement benefit?
Is Pembridge liable to pay Mr. Kazimierczuk’s expenses in respect of the Arbitration?
Is Mr. Kazimierczuk liable to pay Pembridge’s expenses in respect of the Arbitration?

Result:

Mr. Kazimierczuk is not entitled to receive a weekly income replacement benefit.
Mr. Kazimierczuk is accordingly not entitled to interest on the overdue payment of the weekly income replacement benefit.
The parties made no submissions as to expenses. If they are unable to resolve this issue, either party may make an appointment with me to determine the matter in accordance with Rules 75-79 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

The evidence in this Hearing was by agreed statement of facts under which the parties agreed as follows:

(1) The Applicant began working for Heidelberg Canada Graphic Equipment as a technician on June 10, 1996.

(2) The Applicant’s employment was terminated on March 1, 2010 due to company restructuring.

(3) The Applicant received pay in lieu of notice in the amount of $7,971.95 that was paid in semi-monthly instalments from March 15, 2010 to April 30, 2010.

(4) The Applicant received a severance package of $27,667.59 that was paid in semi-monthly instalments from April 30, 2010 to November 15, 2010.

(5) At the time of the accident (November 25, 2010), the Applicant was not employed.

(6) At the time of the accident, the Applicant had not worked 26 of the past 52 weeks.

(7) The Applicant applied for Employment Insurance Benefits (“EI Benefits”) on March 2, 2010.

(8) On March 10, 2010, Service Canada advised the Applicant to submit an application for EI once he stopped receiving severance pay, because he was not eligible to receive these benefits while receiving severance pay.

(9) By letter from Human Resources and Skills Development Canada (HRSDC), the Applicant was advised that total separation monies were in the amount of $39,321.98. HRSDC advised that the separation monies would be deducted from his EI Benefits.

(10) According to the HRSDC payment history table, the subject accident took place during the two-week waiting period prior to the [the issuance] of EI payments.

RELEVANT LAW

Section 5(1) of the Schedule reads as follows:

The insurer shall pay an income replacement benefit to an insured person who sustains an impairment as a result of an accident if the insured person satisfies one or both of the following conditions:

The insured person,

i. was employed at the time of the accident and, as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of that employment, or

ii. was not employed at the time of the accident but,

A. was employed for at least 26 weeks during the 52 weeks before the accident or was receiving benefits under the Employment Insurance Act (Canada) at the time of the accident,

B. was at least 16 years old or was excused from attending school under the Education Act at the time of the accident, and

C. as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment in which the insured person spent the most time during the 52 weeks before the accident.

Sections 9, 10 and 13 of the Employment Insurance Act (Canada) S.C. 1996, c. 23 provides:

Establishment of benefit period

9 When an insured person who qualifies under section 7 or 7.1 makes an initial claim for benefits, a benefit period shall be established and, once it is established, benefits are payable to the person in accordance with this Part for each week of unemployment that falls in the benefit period.

Beginning of benefit period

10 (1) A benefit period begins on the later of

(a) the Sunday of the week in which the interruption of earnings occurs, and

(b) the Sunday of the week in which the initial claim for benefits is made.

Waiting period

13 A claimant is not entitled to be paid benefits in a benefit period until, after the beginning of the benefit period, the claimant has served a two week waiting period that begins with a week of unemployment for which benefits would otherwise be payable.

APPLICANT’S SUBMISSIONS

Mr. Kazimierczuk submitted that his entitlement to EI Benefits had vested before the date of the accident such that he was entitled to receive these benefits at the date of the accident. He would accordingly be entitled to receive the EI Benefits before he actually received these benefits. This alleged entitlement occurred as early as the Sunday of the week preceding this Application for benefits which was on Sunday February 28, 2010. Alternately, Mr. Kazimierczuk submits that he became entitled to EI Benefits on November 15, 2010, which was when the two-week waiting period began. This date is subsequent to Mr. Kazimierczuk receiving all the money due him from his employer (the separation money) following the termination of his employment and ten days before the date of the accident.

Mr. Kazimierczuk received a letter,² dated October 7, 2010, from HRSDC in which he was told that the separation money that he received from his employer in the amount of $39,321.98 would be deducted from his benefits.

The fact that Mr. Kazimierczuk sustained an impairment as a result of an accident is not at issue, nor is the fact that he was not employed for at least 52 weeks before the accident. What is at issue is whether he was receiving benefits under the Employment Insurance Act (Canada) (“the EI Act”) on the date of the accident (November 25, 2010) which was five days before his 64th birthday.

Under the EI Act, once a benefit period is established, an insured person must wait two weeks before receiving employment insurance. In this case, the two-week waiting period began on November 15, 2010 and ended on December 1, 2010. Mr. Kazimierczuk’s accident occurred within the two-week waiting period, on November 25, 2010.

Mr. Kazimierczuk was told that the separation money he received from his employer would be deducted from his benefits based on an average of his normal weekly pay of $966.91 from February 29, 2010 to December 4, 2010. The balance of the separation money ($922.00) would be deducted from his benefits for the week of December 5, 2010.

Mr. Kazimierczuk was eligible to receive EI Benefits before the date of his accident. He was thus entitled to EI Benefits before he actually received such benefits.

Mr. Kazimierczuk submitted that he was receiving EI Benefits at the date of the accident and thus was eligible to receive income replacement benefits (“IRBs”).

It was submitted that the statutory accident benefit scheme is consumer protection legislation, such that an ambiguity in the interpretation of such legislation ought to be resolved in favour of the Applicant for benefits³ and further legislative provisions should not be interpreted so as to lead to an absurd result.⁴

Mr. Kazimierczuk submitted that he was eligible to receive IRBs at the date of his car accident that occurred during the statutorily prescribed two-week waiting period such that it was not necessary for him to have actually received EI Benefits (money) in order to be eligible to receive EI Benefits. Support of this submission was found in an article entitled, “Digest of Benefit Entitlement Principles followed by the Government of Canada” (“the Digest”), which states:

… a claimant is generally not entitled to be paid benefits in a benefit period until a two-week waiting period has been served. During this period, benefits are not paid and claimants are expected to meet the entitlement conditions given the specific type of benefits requested.⁵

Mr. Kazimierczuk was receiving benefits that were just not being paid to him on the date of the accident. As a result, he was entitled to receive IRBs.

INSURER’S SUBMISSIONS

Pembridge submitted that Mr. Kazimierczuk was not receiving EI Benefits on the date of the accident such that he was not entitled to IRBs as referred to in section 5(1) of the Schedule. Mr. Kazimierczuk began receiving EI Benefits when he received EI payments that first occurred on December 5, 2010, being a date post-accident.

It was submitted that the word “benefits” under the EI Act refers to money that is designed to cushion a former employee’s loss of income upon the former employee losing his job. By reason of Mr. Kazimierczuk receiving a severance package from his employer, his entitlement to EI Benefits was shifted ahead for eight months.

Section 2(1) of the EI Act states: “benefits means unemployment benefits paid under Part I, VII.1 or VIII but does not include employment benefits.”

Paragraph 1.8.0 of the Digest⁶ refers to the Waiting Period and reads as follows:

The waiting period is a two-week period for which no benefit is paid to the claimant. This provision can be likened to the deductible clause in fire and automobile insurance policies under which the insured person is expected to share a part of the damages or loss.

Pembridge submitted that the waiting period is “a safeguard for the Government”. The Applicant must share in the risk. It is only after the waiting period expires that an Applicant can receive EI Benefits. The motor vehicle accident occurred within the waiting period at a time when Mr. Kazimierczuk was not receiving EI Benefits. He was not eligible to receive IRBs.

Pembridge submitted there is no ambiguity under any relevant legislation. Section 5 of the Schedule des not refer to eligibility to receive benefits and does not refer to an accident coming within the waiting period. The EI legislation refers to a claimant receiving EI Benefits. Mr. Kazimierczuk was not receiving EI Benefits at the date of the accident and was not eligible to receive IRBs under the Schedule.

ANALYSIS

The issue in this case is whether Mr. Kazimierczuk was receiving benefits under the EI Act at the time of the accident.

For these reasons to follow, I find that Mr. Kazimierczuk was not receiving benefits under the EI Act at the time of the accident. He was thus not entitled to IRBs under section 5 of the Schedule.

The provisions of the EI Act are clear and not in dispute. Mr. Kazimierczuk qualified for EI Benefits and a benefit period was established. He was not entitled to receive EI Benefits until he served a two-week waiting period. It was during this waiting period that he was involved in an accident that gave rise to his claim for accident benefits.

Mr. Kazimierczuk was not employed at the time of the accident nor was he employed for at least 26 weeks before the accident.

Sub clause 5(1)(ii)(a) of the Schedule is clear. Mr. Kazimierczuk was not receiving EI Benefits at the date of the accident (November 25, 2010). He was only entitled to receive EI Benefits on December 4, 2010, i.e., after the expiry of the statutory two week waiting period.

The phrase “was receiving benefits” as found in section 5(1) of the Schedule refers to an event that occurred in the past. Here, in order for Mr. Kazimierczuk to receive IRBs he had to have been receiving, i.e., was in receipt of benefits under the EI Act.

Mr. Kazimierczuk was in receipt of separation benefits from his employer from the date of the termination of his employment on March 1, 2010 until November 15, 2010 (the severance period).

Section 5(1)(i) of the Employment Standards Act, 2000 defines wages as being:

(a) monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied and, (b) any payment required to be made by an employer to any employee under this Act.

Mr. Kazimierczuk was clearly in receipt of the monies he was entitled to (the severance monies) under the terms of his prior employment.

Section 13 of the EI Act provides that:

A claimant is not entitled to be paid benefits in a benefit period until, after the beginning of the benefit period, the claimant has served a two week waiting period that begins with a week of unemployment for which benefits would otherwise be payable.

Mr. Kazimierczuk was not entitled to receive EI Benefits until he used up the monies he received from his employer as a consequence of his being terminated from employment.

Although not binding on me as a matter of stare decisis, I find the words of Arbitrator Naylor in the case of Branden K. Hui and Security National Insurance Company⁷ are relevant to the facts of this case. Arbitrator Naylor wrote at page 17 of her reasons for decision:

Both termination pay and severance pay are payable on the termination of employment. Both are designed to cushion the economic effects of loss of employment by continuing an employee’s flow of income for a period.

These payments are made by the employer to the employee upon termination of employment. They are not made under the EI Act.

When Mr. Kazimierczuk’s employment was terminated, his employer advised him by letter, dated March 1, 2010, that his salary would be continued for a period of eight months or until he found new employment, whichever occurs first. There is no persuasive evidence to suggest that Mr. Kazimierczuk found other employment.⁸

Mr. Kazimierczuk received a summary of payments made to him following the termination of employment that covered the pay period extending from March 15, 2010 to November 15, 2010. This document refers to “salary continuance for 8 months…”.⁹

Mr. Kazimierczuk received a document from Service Canada called Supplementary Record of Claim, which states in part:¹⁰

Claimant is receiving a salary continuance so his employer will not issue him an [sic] ROE [Record of Employment] until that is finished. He was advised to submit a new application once the salary continuance is finished as that is considered insurable hours and earnings and to submit the ROE at that time.

On October 7, 2010, Service Canada¹¹ wrote Mr. Kazimierczuk a letter stating that he received separation monies from his employer in the amount of $39,321.98. “This total income before deductions is earnings that will be deducted prior from his benefits…”.

Mr. Kazimierczuk was not receiving employment benefits under the EI Act at the date of the accident. The Schedule seemingly refers to receipt of EI Benefits. He is not entitled to IRBs.

Both counsel agreed that were I to find that Mr. Kazimierczuk is entitled to IRBs, he would be entitled to an amount of $287.00 per week for a period of 15 months, “subject to statutory adjustment and interest”. In the circumstances, I need not consider this matter.

Mr. Kazimierczuk is not entitled to receive IRBs under the Schedule.

EXPENSES:

The parties made no submissions as to expenses. If they are unable to resolve this issue, either party may make an appointment with me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

July 4, 2016

Irvin H. Sherman, Q.C.

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario