CITATION: Aviva Insurance Company of Canada v. Spence, 2022 ONSC 4988
DIVISIONAL COURT FILE NO.: DC-21-2661
DATE: 2022/09/01
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
M.G. Ellies R.S.J., K.E. Swinton and J.A. Ramsay JJ.
BETWEEN:
Aviva Insurance Company of Canada
Appellant
– and –
Tania Spence
Respondent
James M. Brown, for the Appellant
Kaitlin Brennan, for the Respondent
HEARD: June 2, 2022, at Ottawa via videoconference
M.G. ellies R.S.J.
OVERVIEW
[1] Aviva Insurance Company of Canada (“Aviva”) appeals the decision of the Licence Appeal Tribunal (2021 ONLAT 19-013457) dated February 16, 2021, in which the adjudicator held that sickness benefits paid under the Employment Insurance Act, S.C. 1996, c. 23 (the "EIA"), are not deductible from Ms. Spence’s Income Replacement Benefits (“IRBs”) under the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (the “Schedule”).
[2] For the following reasons, I would allow the appeal and set aside the adjudicator's decision. As I will explain, the adjudicator erred by introducing a distinction between sickness benefits and other benefits paid under the EIA (collectively"EI benefits") that was not called for by either the text, context, scheme, or purpose of the Schedule, thereby creating disharmony where none existed before.
FACTUAL BACKGROUND
[3] The facts before the Tribunal were agreed upon by the parties.
[4] Ms. Spence was involved in a motor vehicle accident on March 4, 2019. At the time of the accident, she was employed full-time as a registered nurse. As a result of injuries sustained in the accident, Ms. Spence applied for accident benefits from her insurer, Aviva, under the Schedule. Based on her gross annual income, she was entitled to receive an IRB in the amount of $400 per week for the period from June 23, 2019 to October 26, 2019.
[5] However, during the period of entitlement, Ms. Spence also received sickness benefits in the amount of $562 per week under the EIA. Aviva took the position that 70 per cent of the EI sickness benefits were deductible from IRBs under the Schedule. As a result, it paid Ms. Spence a weekly IRB in the amount of $6.60. Ms. Spence, on the other hand, took the position that the EI sickness benefits were specifically excluded as a deduction under the Schedule.
[6] Ms. Spence applied to the Tribunal to resolve the dispute. The adjudicator found in her favour and ordered that she was entitled to IRBs in the amount of $5,901, plus interest, representing the amount that had been deducted because of the EI sickness benefits Ms. Spence had received.
ADJUDICATOR’S DECISION
[7] There was no issue between the parties that, given the level of her pre-accident income, Ms. Spence was entitled to an IRB in the base amount of $400. However, s. 7(3)(a) of the Schedule provides that:
The insurer may deduct from the amount of an income replacement benefit payable to an insured person,
(a) 70 per cent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit [Emphasis added.]
[8] The issue before the adjudicator was whether 70 per cent of the EI sickness benefits paid to Ms. Spence after the accident were to be deducted from her IRBs under this section.
[9] The term “gross employment income” is defined in s. 4(1) of the Schedule as:
salary, wages and other remuneration from employment, including fees and other remuneration for holding office, and any benefits received under the Employment Insurance Act (Canada)
[10] There was also no dispute between the parties that these provisions capture EI maternity and unemployment benefits and require that 70 per cent of those benefits be deducted from an insured person’s IRB. Ms. Spence argued, however, that EI sickness benefits were different. The adjudicator agreed.
[11] The adjudicator found that there was "ambiguity" between the way EI benefits were treated in s. 7(3)(a) and the way they were treated in other parts of the Schedule. He looked first at the treatment of other income replacement assistance.[^1] Under s. 7(1) of the Schedule"other income replacement assistance" received by an insured must be deducted from the amount of the IRB otherwise payable. However, under s. 4(1), EI benefits are excluded from the definition of other income replacement assistance. The relevant portion of s. 4(1) reads:
“other income replacement assistance” means, in respect of an insured person who sustains an impairment as a result of an accident,
(a) the amount of any gross weekly payment for loss of income that is received by or available to the person as a result of the accident under the laws of any jurisdiction or under any income continuation benefit plan, other than,
(i) a benefit under the Employment Insurance Act (Canada),
[12] The adjudicator next looked at the treatment of temporary disability benefits under s. 47 of the Schedule. Under s. 47(1) of the Schedule, a "temporary disability benefit" received by an insured person "in respect of a period following the accident and in respect of an impairment that occurred before the accident” may also be deducted from the amount otherwise payable to the insured person as an IRB. Once again, however, EI benefits are excluded from the definition. Under s. 47(3), the term “temporary disability benefits” is defined as follows:
“temporary disability benefit” means,
(f) any other periodic temporary benefit paid under an income continuation benefit plan or law, other than,
(i) benefits under the Employment Insurance Act (Canada),
[13] The adjudicator found a conflict in the fact that EI benefits were excluded from the definitions of other income replacement assistance and temporary disability benefits (and therefore not to be deducted from IRBs), but included as gross employment income under the Schedule (and therefore to be deducted from IRBs). Based on this conflict, he held that it was necessary to look beyond the plain meaning of the words in ss. 4(1) and 7(3)(a).
[14] Looking specifically at the treatment of temporary disability benefits under s. 47(1), the adjudicator concluded that the Legislature intended to treat EI sickness benefits differently than other EI benefits because only sickness benefits were received "in respect of an impairment". Returning to s. 7(3)(a), the adjudicator concluded that EI sickness benefits were not to be included in gross employment income (and therefore not deducted at the rate of 70 per cent) because sickness benefits are "received as a result of an impairment that renders the applicant unable to work" whereas, he reasoned, only income earned from active employment after the accident had to be deducted under that section. At para. 20, he wrote:
[W]here the EI sickness benefit is only received as a result of an impairment that renders the applicant unable to work, I find the ambiguity would be increased by s. 7(3)(a) because that section states that the applicant must be “employed after the accident and during the period in which he or she is eligible to receive” an IRB. While the applicant’s position was being held for her during her 15-week absence, I am not prepared to find that her EI sickness benefit was “employment income” because she was unable to work as a result of the accident during this time.
[15] On the basis that the Schedule was consumer-protection legislation, the adjudicator resolved the perceived ambiguity in favour of Ms. Spence. He held that Aviva had improperly deducted the EI sickness benefits received by her from her IRBs and awarded her the amount the parties had agreed would be owed in that event.
RECONSIDERATION DECISION
[16] Relying on the Tribunal's rules of practice, Aviva submitted a request for reconsideration following the adjudicator's decision. The request was heard by the same adjudicator, who dismissed it because he remained of the belief "that EI sickness benefits fall within the temporary disability benefit exclusion provided for in s. 47(3)(f)(i) … as they are the only form of EI benefits that are received 'in respect of an impairment'" (Reconsideration Decision, at para. 7).
ISSUE ON APPEAL
[17] The sole issue in this appeal is whether EI sickness benefits received after an accident must be included in gross employment income under s. 4(1) and therefore deducted from the IRB otherwise payable at the rate of 70 per cent under s. 7(3) (a) of the Schedule.
STANDARD OF REVIEW
[18] The parties agree, as do I, that the issue framed above raises a question of law. Section 11(6) of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, provides for a statutory right of appeal with respect to such questions. The standard of review on appeals under s. 11(6) is correctness: Yatar v. TD Insurance Meloche Monnex, 2021 ONSC 2507 (Div. Ct.), at para. 25; Kyrylenko v. Aviva Insurance Canada, 2021 ONSC 4929 (Div. Ct.), at para. 11.
ANALYSIS
[19] The issue before the Tribunal was one of statutory interpretation. As the adjudicator correctly held, the modern approach to statutory interpretation requires that "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": Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, at paras. 117-118. This approach applies both to the interpretation of regulations such as the Schedule and to the legislation under which they are enacted: Ayr Farmers Mutual Insurance Co. v. Wright, 2016 ONCA 789, at para. 27. However, while the adjudicator correctly set out the appropriate approach, with respect, he made fundamental errors in applying it.
No Ambiguity Regarding EI Benefits in the Schedule
[20] The first error was in finding ambiguity in the Schedule as it relates to the treatment of EI benefits. As Aviva correctly submits, there is no such ambiguity.
[21] EI benefits are referred to in four places in the Schedule. In addition to the references in ss. 4(1), 7(1), and 47(3) mentioned above, EI benefits are also referred to in s. 5(1). Under that section, an insured person who was unemployed at the time of the accident, but was receiving EI benefits at the time, is entitled to be paid an IRB if he or she sustains an impairment as a result of the accident. Taken together, these four sections operate to treat all EI benefits as income, regardless of whether they were being received before the accident, and to treat all EI benefits similarly, regardless of the reason for which the benefits are being paid.
[22] There is no conflict between the way in which EI benefits are deducted as gross employment income from IRBs under s. 7(3)(a) and the way in which EI benefits are excluded from the definitions of other income replacement assistance under s. 4(1) and temporary disability benefits under s. 47(3) of the Schedule. Excluding EI benefits from these definitions ensures that EI benefits which might otherwise meet the definitions are not deducted twice: once as gross employment income and again as either other income replacement assistance or as a temporary disability benefit. This ensures consistency of treatment, not the opposite.
[23] The adjudicator found it "unhelpful" that the Legislature had not parsed out the different types of EI benefits under the Schedule. With respect, the fact that they were not parsed out ought to have indicated to the adjudicator the Legislature's intention not to treat them any differently. As Aviva points out, it would have been a simple matter to do so, had that been the intent.
[24] There are other signs of the Legislature's intention to treat all EI benefits as gross employment income in the Schedule. One of them is the express use of the word "any" in the definition of gross employment income as including "any benefits received under the Employment Insurance Act". Another is the implicit use of that word in s. 5(1), which entitles an insured to an IRB even while unemployed, provided the insured "was receiving [any] benefits under the Employment Insurance Act (Canada) at the time of the accident".
[25] This last point leads me to a discussion of the adjudicator's second error.
Gross Employment Income Need Not Arise from Active Employment
[26] The adjudicator's second fundamental error was in finding that only income received from active employment after the accident need be deducted under s. 7(3)(a) as gross employment income. To understand why, it is helpful to set out the section again:
The insurer may deduct from the amount of an income replacement benefit payable to an insured person,
(a) 70 per cent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit.
[27] By finding as he did, the adjudicator effectively interpreted the words " after the accident" in s. 7(3)(a) as modifying the words "being employed". However, in my view, the words "after the accident" should be interpreted as referring to the time at which the income is received and the words "as a result of being employed" should be interpreted as referring to the reason for which the income is received.
[28] This interpretation would be consistent with decisions of the Tribunal in which it has been held that an insured need not be engaged in active employment for income received after the accident to qualify as gross employment income: S.W. v. Aviva Insurance Company of Canada, 2018 140996 (ON LAT); A.S. v. Economical Mutual Insurance Company, 2018 28266 (ON LAT); D.M. v. Aviva Insurance Canada, 2020 61459 (ON LAT).
[29] More importantly, this interpretation would also be consistent with the scheme and purpose of the Schedule. As I have explained, the scheme of the Schedule is to treat all EI benefits as income, regardless of the reason for or the time at which they are received. As Aviva correctly submits, the purpose of the Schedule is to help minimize the immediate impact of a loss of income resulting from a motor vehicle accident, prevent overcompensation, and to make the motor vehicle insurer the payor of last resort: Bapoo v. Co-operators General Insurance Co. (1997), 1997 6320 (ON CA), 36 O.R. (3d) 616 (Ont. C.A.), at paras. 14-16. The adjudicator's decision had the effect of overcompensating Ms. Spence because of the nature of the EI benefits she received and making the Canada Employment Insurance Commission the payor of last resort. Given the degree to which the adjudicator's decision interfered with the purpose of the Schedule, it is no answer, as counsel for Ms. Spence submits, that the overcompensation might be adjusted for by the Commission under the EIA.
[30] Counsel for Ms. Spence submits that, even if the words "as a result of being employed" are interpreted to refer to the reason for the collateral benefits being received after an accident, sickness benefits still do not fall within s. 7(3)(a) because they are received as a result of an impairment, and not because of employment. I cannot accept this argument.
[31] As Aviva correctly points out, the payment of any EI benefit involves at least two prerequisites. The first is employment. Under the EIA, to qualify for any benefits, an insured must have sufficient insurable earnings. For some benefits, the second prerequisite is unemployment. For others, it is maternity or paternity. For sickness benefits, it is illness or injury. However, all of these benefits have in common the fact that they are paid "as a result of being employed", just as the name of the EIA suggests.
[32] For these reasons, the adjudicator in this case erred by finding that the definition of gross employment income required that an insured be actively employed after the accident.
Ms. Spence's Sickness Benefits Do Not Qualify as Temporary Disability Benefits
[33] The third error made by the adjudicator did not become clear until he released his reconsideration decision.
[34] On behalf of Ms. Spence, counsel appearing before the adjudicator had argued that her sickness benefits fell under the definition of other income replacement assistance under s. 4(1), not under the definition of temporary disability benefits under s. 47(3). In his original decision, the adjudicator appeared to rely on s. 47(3) to find legislative intent without ever making it clear exactly how he characterized Ms. Spence's sickness benefits. At para. 18, he wrote:
While I agree with the applicant that there is no explicit differentiation under the Schedule between the EI sickness benefits at issue here and EI regular benefits (such as unemployment or maternity benefits, as the case law focuses on), I am prepared to find that s. 47(3), which is under the section dedicated to "Payment of Benefits", demonstrates that the legislature intended EI sickness benefits to be treated differently.
[35] However, in his reconsideration decision, the adjudicator made it clear that he had concluded that Ms. Spence's EI sickness benefits qualified as temporary disability benefits. At para. 7, he wrote:
I remain of the belief that EI sickness benefits fall within the temporary disability benefit exclusion provided for in s. 47(3)(f)(i) … as they are the only form of EI benefits that are received "in respect of an impairment" as "impairment" is defined by s. 3 of the Schedule.
[36] In reaching this conclusion, the adjudicator undermined the entire basis upon which he had determined that the Legislature intended to treat EI sickness benefits differently because, under s. 47(1) of the Schedule, only temporary disability benefits received "in respect of an impairment that occurred before the accident" are deductible from the amount otherwise payable to an insured person as an IRB. The EI sickness benefits received by Ms. Spence in this case were being paid in connection with the very accident with respect to which she had applied for IRBs. For this reason, it was not open to the adjudicator to find that the sickness benefits being paid to Ms. Spence qualified as temporary disability benefits and, therefore, there was no possibility of a conflict in the way in which they were treated under the Schedule.
CONCLUSION
[37] These three errors by the adjudicator – finding an ambiguity in the legislation where none existed, finding that only income from active employment qualifies as gross employment income, and finding that the EI sickness benefits paid to Ms. Spence qualified as temporary disability benefits – led the adjudicator to conclude incorrectly that EI sickness benefits are to be treated differently than other EI benefits under the Schedule. As I have explained, they are not. The adjudicator's conclusion to the contrary constituted an error of law. His decision that the sickness benefits ought not to have been deducted from Ms. Spence's IRBs, therefore, cannot stand. I would allow the appeal andset aside his decision.
COSTS
[38] The parties agreed at the hearing that, if Aviva was successful, there would be no costs payable by either party. I would therefore make no order as to costs.
___________________________ M.G. Ellies R.S.J.
I agree
K.E. Swinton J.
I agree
J.A. Ramsay J.
Released: September 1, 2022
CITATION: Aviva Insurance Company of Canada v. Spence, 2022 ONSC 4988
DIVISIONAL COURT FILE NO.: DC-21-2661
DATE: 2022/09/01
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
M.G. Ellies R.S.J., K.E. Swinton and J.A. Ramsay JJ.
BETWEEN:
Aviva Insurance Company of Canada
Appellant
– and –
Tania Spence
Respondent
REASONS FOR JUDGMENT
M.G. Ellies R.S.J.
Released: September 1, 2022
[^1]: Aviva submits that the adjudicator fell into error by first concluding that s. 7(3)(a) required that only income received after the accident from active employment be deducted. However, the adjudicator instead began his reasoning process by examining the definition of gross employment income (see para. 16 of his reasons), then moved to the definitions of other income replacement assistance and temporary disability benefits (see paras. 16 and18), and finished by considering s. 7(3)(a) (see para. 20).