QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2009 SKQB 70 Date: 2009 02 09 Docket: Q.B. No. 671 of 2001 Judicial Centre: Prince Albert BETWEEN: ERNEST MONTGRAND and SASKATCHEWAN GOVERNMENT INSURANCE Counsel: P. V. Abrametz for the appellant J. A. Bailey for the respondent JUDGMENT ROTHERY J. February 9, 2009 1) In judgment rendered April 14, 2004, and cited as 2004 SKQB 156 (CanLII), determined the income replacement benefit (the “IRB”) for Ernest Montgrand as non-earner as defined by The Automobile Accident Insurance Act, R.S.S. 1978, c.A-35 (the”Act”). Pursuant to s. 117 of the Act, and s. 24 of The Personal Injury Benefits Regulations, c.A-35, Reg. (the “Regulations”), found that Montgrand’s IRB for the 181st and subsequent days following an accident should not be less than the IRB calculated for the first 180 days after the accident, as determined pursuant to s. 116 of the Act. 2) This interpretation of the Act and Regulations was upheld by the Saskatchewan Court of Appeal, cited at 2007 SKCA 103 (CanLII). Klebuc, C.J.S. stated the following at para. [19] SGI maintains the hearing judge erred in holding that the income replacement benefit payable during the post 180 day period pursuant to s. 117(1) and (3) of the Act is not to be less than the income replacement benefit payable during the 180 day period. It argues that the Act is intended to correlate victim's income replacement benefit with his or her earning reality. Therefore, the 180 day income replacement benefit against which s. 117(4) "is designed to be measured is that of 'weighted average' calculation." It also submits the hearing judge's interpretation conflicts with the provisions of s. 117(3) of the Act and otherwise renders meaningless several sections of the Regulations, particularly s. 24(1) thereof. [20] The hearing judge raised no concern with respect to the "weighted average approach" used by SGI in calculating the income replacement benefits for the post 180 day period, beyond noting that the income replacement benefit payable for the post 180 day period could not be less than the amounts Montgrand received pursuant to s. 116(1) of the Act. At paras. 20 and 21, she states: [20] Ensuring that the IRB [income replacement benefit] is not less than the amount received for the first 180 days is in keeping with the purpose of the legislation [ss. 117(4)]. It strives for one's earning reality. non-earner in the past may well become someone whose employment income, but for the accident, would be more than the "weighted average approach". If claimant has proved on balance of probabilities that the promised employment reflects his or her earning reality, poor past record ought not to preclude the claimant from an IRB that reflects his earning reality. [21] Whether Montgrand's IRB in the first 180 days, based on the court's finding of facts, is greater or less than the IRB as prescribed by s. 117 of the Act for the subsequent days, is matter of mathematical calculation. If it is greater, Montgrand has the benefit provided by s. 117(4) of the Act ... [21] Montgrand likewise never questioned the validity of the "weighted average approach" employed by SGI beyond advancing an interpretation of s. 117(4) of the Act that, on it face, is inconsistent with the "weighted average approach" used by SGI. As result, there is no true lis regarding the efficacy of using SGI's "weighted average approach" to calculate the income replacement benefit for the post 180 day period. Consequently, leave the applicability thereof for determination in another case. [22] reject the argument that s. 117(4) conflicts with s. 117(3) of the Act, for the latter is expressly subordinated to the provisions of the former. Nor is there any uncertainty as to the meaning of s. 117(4) or s. 116. The intention reflected there is to provide two forms of income replacement benefits: short-term income replacement benefit during the 180 day period pursuant to s. 116, and long-term income replacement benefit during the post-180 day period pursuant to s. 117(1), (3) and (4) of the Act. [23] In my view, s. 117(1), (3) and (4) of the Act were designed to provide non-earner with long-term income replacement benefit based on the greater of: (i) the highest gross yearly employment income earned by the victim by means of employment in any one of the five calendar years preceding the date of the accident; or, (ii) the income replacement benefits payable or paid pursuant to s. 116(1), subject to prescribed maximums that do not apply in this case. It therefore follows that if any Regulation provides otherwise, including the imposition of the "weighted average approach" on s. 117(4) of the Act, it is either ultra vires, or of kind that may be read down to comply with ss. 116 and 117 of the Act. 3) The Saskatchewan Court of Appeal referred the matter of determination of the calculation of the IRB for both the first 180 day period and the post 180 day period to me. Counsel for Montgrand and SGI have agreed that the calculation of the IRB as provided by s. 117 of the Act is the annualized sum of $28,889.75. 4) The parties brought the matter back for further determination because SGI is paying Montgrand an amount less than that. Counsel for Montgrand took the position, which he abandoned at this hearing, that the disability benefits pursuant to the Canada Pension Plan should not be taken into consideration to reduce Montgrand’s IRB. Section 207 of the Act states: 207. If, as result of an accident, victim is entitled to an income replacement benefit and disability benefit pursuant to the Canada Pension Plan or any similar program in jurisdiction outside Saskatchewan, the insurer shall reduce the income replacement benefit by the amount of the disability benefit payable to the victim. 5) Obviously, SGI is correctly deducting the amount of Canada Pension Plan benefits Montgrand is receiving. However, counsel for Montgrand takes issue with SGI’s reduction of the amount determined in accordance with s. 117 of the Act by calculating Montgrand’s net income in accordance with ss. 135 - 138 of the Act. Counsel for Montgrand takes the position that once the annualized sum of $28,889.75 was set in accordance with s. 117, the provisions of ss. 135 138 do not apply to Montgrand as non-earner defined in the Act. 6) Counsel for SGI submits that once the IRB is calculated for the various types of earners as defined in Division 4, and itemized in s. 111, that IRB must be used to determine the victim’s net income. The further calculations to determine net income are set out in ss. 136 138 of the Act. In summary, SGI argues that once the net income is calculated on formula of the gross yearly employment income (“GYEI”) less deductions under the provincial and federal income tax acts, premiums under the Unemployment Insurance Act (Canada), and contributions to the Canada Pension Plan, then the final IRB is equal to 90% of the net income, calculated on yearly basis. 7) Sections 135 137 of the Act, which are the relevant sections for claims made in 2001, state: 135 In this section and in sections 136 to 138: (a) “gross yearly employment income”, with respect to victim, means the gross yearly employment income of the victim’s employment that the insurer is required to use or that the insurer determines pursuant to this Division; (b) “maximum yearly insurable earnings” means the maximum yearly insurable earnings calculated pursuant to section 138; (c) “net income” means net income calculated pursuant to section 137. 136 (1) Subject to the other provisions of this Division, the amount of an income replacement benefit that victim is entitled to pursuant to this Division is equal to 90% of the victim’s net income, calculated on yearly basis. (2) Subject to sections 139 and 140, the income replacement benefit of full-time earner or of victim for whom the insurer determines an employment pursuant to section 131, 132, or 133 is to be not less than the amount of an income replacement benefit calculated on the basis of gross yearly employment income determined on the basis of: (a) the minimum wage established pursuant to The Labour Standards Act; and (b) except in the case of part-time employment, the number of hours of work per week set out in subsection 6(1) of The Labour Standards Act. (3) Notwithstanding any other provision of this Division, no claimant is entitled to an income replacement benefit for the first seven days from the date of the accident. (4) Subsection (3) does not apply to an income replacement benefit payable pursuant to section 143. 137 (1) victim’s net income is equal to the amount calculated in accordance with the following formula: where: NI is the victim’s net income; GYEI is the lesser of the victim’s gross yearly employment income and the maximum yearly insurable earnings; and is an amount calculated by the insurer in accordance with this section and the regulations for income tax pursuant to The Income Tax Act and the Income Tax Act (Canada) premiums pursuant to the Unemployment Insurance Act (Canada) and contributions pursuant to the Canada Pension Plan. (2) For the purposes of calculating pursuant to subsection (1): (a) the insurer shall use the Acts mentioned in sub-section (1) as they exist on December 31 of the year before the year for which the insurer is making the calculation; and (b) the insurer shall take into account the number of dependants of the victim at the time of the calculation. (3) For the purpose of determining net income pursuant to this section, the gross yearly employment income of victim includes any benefits pursuant the Unemployment Insurance Act (Canada) or the National Training Act (Canada), or any other prescribed benefit, to which the victim would have been entitled at the time of the accident. 8) In support of his position that Montgrand’s IRB ought not to be reduced beyond the calculation of $28,889.75 made in accordance with s. 117 of the Act, his counsel argues that s. 136(1) of the Act states: “Subject to the other provisions of this Division, ...” Therefore, s. 136(1) is subservient to s. 117, and no further reduction ought to be made. 9) The provision of section 117, in effect at the relevant time, states: 117(1) Subject to subsection (5), if on the 181st and subsequent days following an accident non-earner is unable to hold the employment he or she could have held at the time of the accident, the non-earner is entitled to an income replacement benefit calculated pursuant to this section. (2) For the purposes of calculating an income replacement benefit pursuant to this section, the insurer shall determine an employment for the non-earner pursuant to section 131. (3) Subject to subsection (4), the insurer shall calculate the income replacement benefit on the basis of the gross yearly employment income that the insurer determines the non-earner could have earned from the employment mentioned in subsection (2), considering the following factors: (a) whether the non-earner would have held the employment on full-time or part-time basis; (b) the work experience and earnings of the non-earner in the five years before the accident; and (c) any prescribed factors. (4) An income replacement benefit pursuant to this section is not to be less than the income replacement benefit the non-earner received pursuant to section 116. (5) If non-earner is entitled to weekly benefit for the care of others pursuant to section 159, the non-earner is not entitled to an income replacement benefit pursuant to this section. 10) Section 131 is also important: 131(1) Where the insurer is required pursuant to this Division to determine an employment for victim from the 181st day after an accident the insurer shall consider: (a) the education, training, work experience and physical and intellectual abilities of the victim immediately before the accident; and (b) any other prescribed factors. (2) An employment determined by the insurer must be an employment that the victim could have held: (a) on regular and full-time basis immediately before the accident; or (b) if it would not have been possible for the victim to hold employment on regular and full-time basis, on part-time basis immediately before the accident. 11) As stated by s. 117(2), the employment for the non-earner shall be determined in accordance with s. 131. Section 136(2) incorporates the IRB for non-earner by reference to the non-earner, that is, reference to the calculation of IRB made pursuant to s. 131. Thus, the provisions of ss. 135 138 of the act apply to non-earners such as Montgrand. 12) The phrase, “subject to”, may mean “subservient to” or “subordinate to”, but that is too restrictive definition of the phrase. In R. v. F. Peters Excavating (1996) Ltd., 2005 SKQB 399 (CanLII), at para. [8] First of all, to define the phrase "subject to" as meaning "subordinate to" or "subservient to"is restrictive definition. Black's Law Dictionary, 6th ed. (St. Paul, Minn.: West Publishing Co., 1990) defines the phrase as follows: SUBJECT TO: Liable, subordinate, subservient, inferior, obedient to; governed by or affected by; provided that; provided; answerable for. [9] When one interprets the phrase "subject to" as "provided that", s. 13 of the Regulation functions as whole. That is, not only is the maximum gross weight for tandem axle group on primary highway 17,000 kilograms, but at the same time, the maximum gross weight for any tire on that vehicle is 10 kilograms per millimetre of tire width. As stated in Sullivan and Driedger on the Construction of Statutes, 4th ed. (London, Butterworths, 2002) at pages 262 and 263: Governing principle. It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of functioning whole. The parts are presumed to fit together logically to form rational, internally consistent framework; and because the framework has purpose, the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal. The presumption of coherence is also expressed as presumption against internal conflict. It is presumed that the body of legislation enacted by legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other. 13) As stated in Korpess v. Saskatchewan Government Insurance (1998), 1997 CanLII 9807 (SK CA), 163 Sask. R. 227 (Sask. C.A.) at para. 8, “the interpretation of statute which produces the greatest harmony and least inconsistency is the construction which ought to prevail”. 14) Thus, interpreting the phrase “subject to the other provisions of this Division” as meaning “governed by” or “affected by” the other provisions of this Division, logical framework develops for calculating the net income of all victims, whether they be full-time earners, temporary earners, part-time earners, or non-earners, such as Montgrand. It would be neither a rational nor fair interpretation to reduce a full-time earner’s IRB by 90% and not the other types of earners. It would be neither a rational nor fair interpretation to deduct income tax, employment insurance premiums and Canada Pension contributions from only full-time earners. All earners are subject to these payments being deducted from their income but for their inability to earn an income because of an automobile accident. The further deductions to obtain the non-earner’s IRB is in keeping with his earning reality. And, as stated in the previous Montgrand judgment, the legislation attempts to find the non-earner’s earning reality. 15) Therefore, I must conclude that SGI has correctly calculated Montgrand’s IRB when it made the requisite deductions as set out in s. 137 to find Montgrand’s net income, and then reduced the net income to 90% to determine his IRB. 16) Counsel for Montgrand also appealed SGI’s calculation of interest on monies owed to Montgrand on the basis of pre-judgment interest. Counsel now concedes that SGI was correct in applying Regulation 102 which states, “Interest payable pursuant to Part VIII of the Act is to be calculated in accordance with The Pre-judgment Interest Act.” 17) Counsel for Montgrand seeks solicitor and client costs for this proceeding. It is agreed between counsel that Mr. Abrametz’s fee on solicitor and client basis have been paid up to the conclusion of the appeal. 18) Section 198 of the Act and Regulation 101 contemplate the payment of claimant’s solicitor and client costs if the claimant is successful on appeal. Because Montgrand has not been successful in this proceeding, he is not entitled to any more costs from SGI. J. A. R. ROTHERY
At issue is the amount of Income Replacement Benefits (IRB) payable to the appellant by SGI. The parties agree that the calculation of the IRB as provided by s. 117 of the Act is the annualized sum of $28,889.75. The appellant takes issue with SGI's reduction of the amount determined in accordance with s. 117 of the Act by calculating the appellant's net income in accordance with s. 135 to s. 138 of the Act. HELD: SGI has correctly calculated the appellant's IRB when it made the requisite deductions as set out in s. 137 to find the appellant's net income, and then reduced the net income to 90% to determine his IRB. It would be neither a rational nor fair interpretation to reduce a full-time earner's IRB by 90% and not the other types of earners. It would be neither a rational nor fair interpretation to deduct income tax, employment insurance premiums and Canada Pension contributions from only full-time earners. All earners are subject to these payments being deducted from their income but for their inability to earn an income because of an automobile accident. The further deductions to obtain the non- earner's IRB are in keeping with his earning reality.