West v. Workplace Safety and Insurance Board

[Indexed as: West v. Workplace Safety and Insurance Board]

78 O.R. (3d) 270

[2005] O.J. No. 4052

Divisional Court File No. 74428/05

Ontario Superior Court of Justice

Divisional Court,

Lane, Meehan and Sanderson JJ.

September 22, 2005

Workers' compensation -- Election -- Workplace Safety and Insurance Board failing to recognize that worker might have claim against third party -- Board failing to send election form to worker -- Worker not aware that he had potential third party claim when he started receiving benefits -- Board erring in finding that worker's receipt of benefits constituted "deemed election" in these circumstances -- Board also erring in refusing to permit worker to withdraw his claim unless he repaid all benefits immediately.

The applicant was seriously injured in the course of his employment when the platform/bucket in which he was standing separated from the boom arm and he plummeted to the ground. The Workplace Safety and Insurance Board ("WSIB") primary adjudicator failed to recognize that the applicant's injuries might have been caused by a third party, specifically, the manufacturer of the boom. As a result, he did not forward the Form 7 to WSIB legal services for consideration of a potential third party claim, and an election form was never forwarded to the applicant. Instead, the WSIB forwarded a Form 6 to the applicant while he was still in hospital. That form contained nothing to alert him to the possibility of a third party claim. When he signed it, he had not been alerted to its possible significance or to his need for legal advice. Some time later, the applicant spoke to a lawyer and decided that he wanted to commence an action against the manufacturer of the boom arm. The WSIB ruled that the applicant's receipt of benefits was a deemed election to receive benefits and that, given the amount of benefits paid on the claim and the severity of the injury, permission to withdraw the claim would not be granted. The applicant had offered to repay all benefits he had received from the WSIB once he reached a settlement of his lawsuit, but the WSIB had refused that offer. The applicant brought an application for judicial review of the WSIB's decision.

Held, the application should be granted.

In the circumstances of this case, the WSIB made a patent and reversible error in deciding that the applicant's receipt of benefits constituted a deemed election. Moreover, s. 119 of the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16 , Sched. A requires the WSIB to exercise its discretion based on the merits and justice of each case. In holding that it only allowed workers to withdraw claims if they agreed to immediately reimburse the full amount of the benefits and that it did not accept undertakings or agreements to pay, the WSIB was improperly applying an inflexible rule.

APPLICATION for judicial review of a decision of the Workplace Safety and Insurance Board.

Cases referred to Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634, 188 O.A.C. 201, 48 C.P.C. (5th) 56, 132 A.C.W.S. (3d) 15 (C.A.); Zesta Engineering Ltd. v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495, 21 C.C.E.L. (3d) 161, 118 A.C.W.S. (3d) 341 (C.A.) Statutes referred to Judicial Review Procedure Act, R.S.O. 1990, c. J.1, ss. 6(1), 28 Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A, ss. 28, 119 [page271]

Annette Casullo, for applicant. Jean-Denis Belec, for respondent.

The judgment of the court was delivered by

[1] SANDERSON J.:-- This is an application for judicial review pursuant to s. 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1. The applicant Marvin West ("Mr. West") is and on May 23, 2002 was an employee of Hydro One.

[2] On that day, Mr. West was seriously injured during the course of his employment when he plummeted approximately 30 feet to the ground after the platform/bucket in which he was standing separated from a boom arm.

[3] The next day, on May 24, 2002, Hydro One submitted an Employers' Report of Injury (Form 7) to the Workplace Safety and Insurance Board ("WSIB") containing the following:

Worker injured his low back when the upper boom on the timberjack broke causing the bucket and worker to fall . . .

[4] While s. 28(1) of the Act denies a worker the right to sue his employer and other workers employed by a Schedule 1 employer, the Workplace Safety and Insurance Act, 1997, S.O. 1997, c.16, Sched. A (the "Act") allows the worker the right to bring third party actions against others.

[5] Section 28(4) provides as follows:

28(4) Subsections (1) and (2) do not apply if any employer other than the worker's employer supplied a motor vehicle, machinery or equipment on a purchase or rental basis without also supplying workers to operate the motor vehicle, machinery or equipment.

[6] Inexplicably, despite reading the information provided on the face of Form 7 prepared by Hydro One, the WSIB primary adjudicator did not recognize that Mr. West's injuries might have been caused, at least in part, by someone or something other than Hydro One or one of its employees. Specifically, he did not consider the manufacturer of the boom. He did not forward the Form 7, as he should have done, to WSIB legal services for consideration of a potential third party claim.

[7] We note that as of October 10, 2001, Form 7 had been amended to require the employer (in this case, Hydro One) to disclose the name and address of any manufacturer/supplier of any object, material or equipment that may have caused or contributed to a worker's injury. The Form 7 completed by Hydro One [page272] and forwarded to the WSIB was outdated. Hydro One did not provide the required information to the WSIB.

[8] Nevertheless, information that should have alerted the adjudicator to the possibility of a third party action had been included on Form 7. The WSIB adjudicator should have recognized that the manufacturer of the timberjack/boom arm may have caused or contributed to Mr. West's injury.

[9] As the result of the WSIB adjudicator's failure to recognize the existence of a possible third party claim and of Hydro One's failure to use and properly complete the required Form 7, the WSIB required procedure where a possibility of third party involvement exists was not followed. Where they have recognized the potential of a third party claim, WSIB claims adjudicators are required to refer the file to WSIB legal services to consider sending an election form to the injured worker.

[10] Had the Legal Division reviewed the matter and recognized a possible third party claim, the WSIB would have sent Mr. West an "Election Form Schedule 1, Third Party" (the "election form"), including the following words:

(3) Under the Workplace Safety and Insurance Act, I may be able to claim benefits under the insurance plan OR I may be able to take legal action against a person or persons who may have been responsible for the accident . . .

(5) I choose to receive benefits under the Workplace Safety and Insurance Plan . . .

(6) I understand that by choosing to receive benefits under the insurance plan . . . I cannot take any form of legal action on my own . . .

(7) By signing the form I am informing the Ontario Workplace Safety and Insurance Board of my choice to claim benefits under the insurance plan . . .

[11] The covering letter that is usually sent to the worker with the election form includes the following:

Before you decide, you may wish to discuss your options with a lawyer or representative of your choice . . .

[12] As mentioned earlier, the WSIB adjudicator did not recognize, as he should have, the possibility of a third party claim. Consequently, Mr. West did not receive the election form or covering letter.

[13] Instead of referring the matter to Legal Services, the WSIB forwarded a Form 6 to Mr. West on May 29, 2002 when he was still in hospital. That form contained nothing to alert him to [page273] the possibility of a third party claim. When he signed it, he had not been alerted to its possible significance or to his need for legal advice.

[14] Well after he signed Form 6, on or about September 10, 2002, Mr. West spoke to lawyers about the accident for the first time. They investigated the merits of a possible third party claim and advised him of the relative advantages of a third party suit versus receiving funds pursuant to the Act. He learned for the first time that suing the boom manufacturer could potentially be much more beneficial than collecting WSIB benefits. The materials before the court disclose a possible differential of $50,000 per year over Mr. West's working life expectancy of more than 20 years.

[15] After receiving legal advice, Mr. West decided he wanted his lawyers to commence an action against the manufacturer of the boom arm on his behalf.

[16] By letter dated January 7, 2003, they advised the WSIB of that decision.

[17] On January 27, 2003, Senior Legal Counsel for the WSIB replied by letter to his lawyers including the following:

As the worker accepted benefits he is deemed to have elected to receive benefits and he is now precluded from bringing any legal action . . . . As this election was made pursuant to s. 30 of the WSIA, there is no right to withdraw the election. Although the WSIB does have the discretion to allow a worker to withdraw a claim, it will only do so where the worker immediately agrees to reimburse the full amount of the benefits paid. The WSIB will not allow its subrogated interest to be protected as it may be held responsible for the costs of the civil action where it did not retain counsel and did not instruct counsel. In addition, the WSIB has invariably encountered difficulty in enforcing repayment of the debt at the conclusion of the litigation, which results in an unnecessary administrative burden and increased legal costs . . .

Given the amount of benefits paid on this claim and the severity of the injury, the WSIB will not allow the claim to be withdrawn at this time. The WSIB will consider bringing an action on his behalf.

As this is final decision of the Legal Services Division relating to third party actions your remedy of appeal is by way of Application for Judicial Review to the Divisional Court . . .

(Emphasis added)

[18] In argument, counsel for the WSIB acknowledged that Mr. West has offered to repay all benefits he has received from the WSIB once he reaches a settlement of his lawsuit and that the WSIB has refused that offer.

[19] The WSIB'S amended factum includes the following at para. 52, p. 19:

The Applicant's proposal that the Board be reimbursed by any settlement proceeds has been problematic to the Board. As illustrated in the case of Sutor v. Workplace Safety and Insurance Board, 2003 23521 (ON CA), [2003] O.J. No. 311 (C.A.), injured workers do not always honour their reimbursement obligations [page274] towards the Board, generating additional inconvenience, time and expense to the Board. Furthermore, this proposal is exactly the kind of engagement and benefit that could bind the Board to an adverse cost award were the Appellant to lose his civil action. Since Sutor, the Board no longer accepts undertakings or agreements to pay. By requiring immediate repayment, the Board severs any and all connections to subsequent litigation . . .

(Emphasis added)

[20] In argument, counsel for Mr. West submitted that he has never elected to receive WSIB benefits, as he never received an election form or was advised (a) that he could be giving up significant rights (e.g., the right to sue a third party and his right to make the decisions regarding that lawsuit); (b) that he should obtain legal advice, inter alia, regarding the relative advantage of receiving benefits under the Act versus tort damages in a lawsuit allowed under the Act against a third party.

[21] We agree. In all the circumstances here, we are of the view that the Board made a patent and reversible error in deciding that Mr. West's receipt of benefits constituted a "deemed election". In all the circumstances here, the WSIB should have forwarded the election form to Mr. West and alerted him of the need for legal advice, given the potential importance of the election. At the time he signed Form 6, Mr. West had no idea that by receiving benefits pursuant to the Act he might be deemed to have forfeited a right that could result in much greater compensation.

[22] The injured worker in Decision No. 813/9, like Mr. West, had not been advised of his right to choose between suing a third party or claiming WSIB benefits. He received benefits and later learned of a right to sue. In that case, the worker commenced an action in tort, the defendant tortfeasor challenged his right to sue, submitting that receipt of WSIB benefits had extinguished it. The Workers' Compensation Appeals Tribunal held that as the worker's receipt of benefits had been uninformed, his receipt of benefits should not be deemed to constitute an election of WSIB benefits and/or a rejection of his right to sue a third party.

[23] While in some circumstances, a worker who has received legal advice and who has fully understood the effect of accepting benefits might be properly held to have forfeited his right to sue a third party (i.e., where he has deliberately made an informed choice to accept one of two options), the facts here cannot and do not support a conclusion of "deemed election".

[24] We are therefore of the view that the Board committed reversible error in holding that Mr. West's receipt of benefits in all the circumstances here could constitute a "deemed election".

[25] Section 119 of the Act requires the Board to exercise its discretion based on the merits and justice of each case. [page275]

[26] Even had we been prepared to uphold the Board's conclusion that Mr. West's receipt of WSIB benefits could constitute a "deemed election" of WSIB benefits in all the circumstances of this case, we would have held that the WSIB clearly failed to exercise its discretion properly, i.e., having regard to Mr. West's particular circumstances. The Board was required to consider all of the exceptional circumstances here, including the failure of its own employees to recognize and consider a potential third party action and to forward the election form to Mr. West thereby alerting him of the potential significance of accepting WSIB benefits, and the desirability of obtaining legal advice before choosing between benefits under the Act and bringing his own lawsuit.

[27] As the WSIB letter to Mr. West's counsel dated January 27, 2003 made clear, the Board considered "the benefits paid and the severity of the injury" and directed that it would "only" allow workers to withdraw claims and to become dominus litis of their own tort actions if they had "immediately agree[d] to reimburse the full amount of the benefits". The respondent's factum refers to an inflexible rule respecting withdrawal of elections: ". . . since Sutor the Board no longer accepts undertakings or agreements to pay".

[28] In other words, the factum and the letter advise that the Board does not and has not adequately considered the particular circumstances of Mr. West's situation, but has relied upon an inflexible rule.

[29] We are all of the view that the Board clearly failed to consider Mr. West's exceptional circumstances here, including his lack of crucial information at the time he received benefits under the Act.

[30] Despite the deference this court routinely gives to exercises of discretion by the WSIB and other Tribunals, in all of the circumstances here, this particular exercise of discretion cannot stand.

Disposition

[31] The application for judicial review is therefore allowed.

[32] Mr. West never elected to receive benefits under the Act in lieu of pursuing his third party rights. He remains dominus litis of his third party action respecting his accident on May 23, 2003.

Costs

[33] The applicant was entirely successful on this application.

[34] At the conclusion of the hearing, Ms. Casullo presented the court with a Brief on Costs, claiming substantial indemnity [page276] costs of $26,276.23, including approximately 70 hours of her own preparation time, 35 hours of law clerk time and 32 hours of articling student time. Ms. Casullo has seven years of experience. The applicant claims $200 an hour for each of Ms. Casullo's first 34.2 hours of time and $225 for each of her subsequent 36.1 hours, plus counsel fee at the hearing of $900. He claims substantial indemnity disbursements of $2,308.23 (including $634.32 for travel and parking fees.)

[35] Having considered the contents of the brief, including the hours spent, and having considered the complexity of the application, the offers to settle and the result, we are of the view that costs on a partial indemnity scale are appropriate. Costs of the motion before Shaughnessy J. have already been fixed at $5,000.

[36] We are following the guidance given by the Court of Appeal in Zesta Engineering v. Cloutier, 2002 25577 (ON CA), [2002] O.J. No. 4495, 21 C.C.E.L. (3d) 161 (C.A.) and in Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 14579 (ON CA), 71 O.R. (3d) 291, [2004] O.J. No. 2634 (C.A.), and are fixing costs in the light of the overall circumstances. We are not following a mathematical approach (i.e., hourly rate Î hours spent).

[37] In all the circumstances here, we are of the view that Divisional Court costs (apart from the $5,000 already awarded) should be fixed at $15,000, inclusive of disbursements and GST.

Application granted.