J. Q.B. A.D. 1996 No. 704 J.C.P.A. IN THE COURT OF QUEEN'S BENCH JUDICIAL CENTRE OF PRINCE ALBERT BETWEEN: ZELMA LEE KORPESS and SASKATCHEWAN GOVERNMENT INSURANCE RESPONDENT M. D. Popescul, Q.C. for the applicant N. B. Fisher for the respondent JUDGMENT ROTHERY J. December 9, 1996 The applicant, Zelma Korpess, is the survivingspouse of Roy Korpess, who died in a motor vehicleaccident. Any benefits she is entitled to receive are in accordance with The Automobile Accident Insurance Act, as amended by The Automobile Accident Insurance Amendment Act, 1994, S.S.1994, c. 34. She received adeath benefit for herself and for her two children. Because she took issue with the calculation of theamount paid, her counsel applied for a review of thedecision as provided by the Act. The review by therespondent, Saskatchewan Government Insurance ("SGI"),gave the same results. Her counsel appealed thatdecision to the Court of Queen\'s Bench. THE ISSUE The essence of Korpess' application is that SGI has not correctly interpreted the provisions of the Act for calculating the death benefit that should be paid to her as surviving spouse. She takes no issue with the calculation of the payment to her for the dependent children. SGI has calculated the payment based on percentage of her late husband's net income rather than on his gross income. She argues that she has received benefit less than the Act contemplates. Oppositely, SGI contends that it is entitled to calculate the payment to the surviving spouse on the basis of the deceased's net income. The method of calculating as defined by the Regulations simply clarifies that the income is based upon actual earnings of the deceased. SGI is not required to calculate any other form of income that might otherwise be payable to victim, such as deemed income for students who are unable to earn an income. Once the actual earnings are determined, net income is calculated. Then, the surviving spouse receives death benefit equal to 50% of that net income. The divergence of opinion by counsel as to themeaning of the death benefit provisions in the Actstems from disagreement on whether the "weekly incomereplacement benefit" referred to in Division 5 of theAct is a different statutory creature than the "incomereplacement benefit" in Division 4. Counsel for Korpess sees the phrases as having separate and distinct meanings. Counsel for SGI argues that the benefit is calculated as determined by the formula in Division 4, being the victim's income replacement benefit. But, one of the figures used in the Division formula is derived from the calculation as stipulated by s. 146(1) in Division and Regulation 33. The language used in the Act for calculating the benefit payable to surviving spouse for dependent children causes special problems. Both counsel agree that the interpretation suggested by SGI is appropriate when calculating the benefit for dependent children. That may not be correct supposition. Careful analysis of the legislation is required. THE LEGISLATION These are the pertinent sections of the Act. In Division entitled Death Benefits, the legislation 146(1) Subject to subsections (3) to (5), surviving spouse is entitled to death benefit calculated in accordance with the following formula: DB (50% IRB) where: DB is the death benefit payable; and IRB is the weekly income replacement benefit that the deceased victim would have been entitled to arising out of the accident if the victim had survived the (2) The death benefit payable pursuant to subsection (1) is payable until the date that the surviving spouse dies. (3) The minimum death benefit payment that surviving spouse is entitled to receive pursuant to subsection (1) is $45,000. (4) For the purposes of subsection (3), the insurer shall capitalize, in accordance with the regulations, the surviving spouse's death benefit pursuant to subsection (1). (5) Where, at the time of the accident, there are children who were dependent on the surviving spouse and who were dependants of the victim, the surviving spouse is entitled to an additional benefit in the amount calculated in accordance with the following formula: (5% IRB) DC where: is the benefit payable; IRB is the weekly income replacement benefit that the deceased victim would have been entitled to arising out of the accident if the victim had survived the accident; and DC is the number of the victim's dependent 148(1) surviving spouse who is entitled to benefit pursuant to section 146 may elect to have the benefit capitalized and paid out as lump sum. Regulation 33 of The Personal Injury Benefits Regulations, c. A-35, Reg. 3, states: 33 In the definition of IRB in subsection 146(1) of the Act, the phrase "the weekly income replacement benefit that the deceased victim would have been entitled to arising out of the accident" means the weekly income replacement benefit the deceased victim would have been entitled to calculated on the basis of the gross yearly employment income that the deceased victim earned from his or her employment at the time of the accident. Section 100(1) of Part VIII of the Act states that: In this Part: (n) "income replacement benefit" means an income replacement benefit payable pursuant to Division 4. In Division 4, entitled Income Replacement Benefits, the relevant sections of the legislation are: 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. 137(1) victim's net income is equal to the amount calculated in accordance with the following 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. 138(1) The amount of the maximum yearly insurable earnings for 1995 is $50,000. (2) The amount of the maximum yearly insurable earning for 1996 and each year after 1996 is the amount calculated in accordance with the following formula: MYIE $50,000 IAWY/IAW95 In Division 9, entitled Payment of Benefits, the Act provides: 177(1) Subject to subsections (2) to (4), the insurer shall pay an income replacement benefit to the person entitled to it once every 14 days. THE SURVIVING SPOUSE'S DEATH BENEFIT How ss. 146 and 136 of the Act are interpreted make considerable difference. On SGI's understanding of the legislation, it calculated that the late Mr. Korpess' gross yearly employment income was $51,343. (The material filed in this application does not specify whether that amount is the actual earnings or the maximum yearly insurable earnings as calculated by s. 138.) SGI then calculated the deceased's net income by deducting the amounts that would have been deducted at source for income tax, Canada Pension Plan and unemployment insurance premiums. This net income was $34,854.62. Translated to weekly net amount, the sum is $670.28. Section 136(1) states that 90% of this amount is the "income replacement benefit". That benefit is $603.25 per week, and that is the amount that SGI divided in half, as instructed by s. 146(1), to constitute the death benefit payable to Mrs. Korpess. SGI states that Mrs. Korpess is entitled to $301.63 per week, payable every 14 days, or lump sum of $336,211.45. To arrive at this calculation, SGI equated the acronym "IRB" in s. 146(1) with the defined phrase "income replacement benefit" in s. 136(1). Counsel for Korpess submits that this is incorrect. The IRB is not the income replacement benefit, but benefit calculated in accordance with the specific provisions as set out in s. 146(1) and Regulation 33. The result is that the death benefit is 50% of the deceased's actual gross yearly employment income that he earned prior to death. must agree. Statutory interpretation requires that legislation be given fair, large and liberal construction to best assure the attainment of its objects (The Interpretation Act, 1995, c. I-11.2, s.10). It also requires that definitions in statute apply to the entire statute unless contrary intention appears in the statute, and the definitions apply to regulations made under an act, except to the extent that contrary intention appears in the regulations (The Interpretation Act, s.13). In this Act, death benefit is provided for surviving spouse of victim killed in motor vehicle accident. All other rights of action are barred (ss. 100 (1)(d) and 102). Thus, an interpretation that bestows the best benefit on the surviving spouse is to be preferred if any ambiguity in the legislation exists. That would assure the attainment of the objects of this Act. But, am not required to determine the meaning of the Act on this basis. The legislation is clear on its wording. First, the phrase "income replacement benefit" used in s. 136(1) is not analogous to the IRB in s. 146(1). Section 136(1) defines the "income replacement benefit" to be the amount that victim is entitled to pursuant "to this Division" (that is, Division 4). IRB is defined in Division as "weekly income replacement benefit ." As allowed by s. 217(1)(a) of the Act, the IRB is further defined in Regulation 33 to mean that which is "calculated on the basis of the gross yearly employment income that the deceased earned from his or her employment at the time of the accident" (emphasis added). "Gross yearly employment income" is defined in s. 135 of the Act, but that is only for the purposes of s.136-138. As allowed by s. 217(1)(j), Regulations 20 and 21 define what is to be considered in calculating the sum of the salary, wages or self-employed income for the purpose of obtaining the victim's "gross yearly employment income". Regulations 20 and 21 also provide the basis of the calculation to be made for the "gross yearly employment income" in Regulation 33. From that, the IRB is calculated, and the death benefit is 50% of the IRB. There is no requirement to use the formula in s.136(1) to calculate the surviving spouse\'s deathbenefit. Section 146(1) is a self-contained formula. If the statute wanted the formula of s. 136(1) used for calculating death benefit, it could have stated as much. Instead, it created specifically defined term for the purposes of s.146. must assume the statute meant something different when it defined an income replacement benefit in s.136 and an IRB in s.146. The difference is that the death benefit is 50% if the victim's gross yearly employment income. Section 146 does not contain any provisions for setting maximum yearly employment income the same way that limit is stipulated in ss. 137-138. The calculation of GYEI in s. 137(1) sets maximum for calculating the victim's net income. Because the Actis silent on this limit in Division 5, I must concludethat the actual income earned, without any limitingmaximum, is the sum that is used to determine the IRBin s. 146(1). That the IRB is not the same as the "income replacement benefit" is also evident from the provisions of the Act that define the pay periods. Section 177(1) requires SGI to pay an "income replacement benefit" once every 14 days, subject to certain exceptions. On the other hand, the death benefit is derived from "weekly income replacement benefit". While the amount may be capitalized and paid out in lump sum, death benefit is simply that. It is not the victim's income replacement benefit, but something payable to the surviving spouse calculated on specific formula. The death benefit is one-half the"weekly income replacement benefit". The ordinarymeaning of this is that the payment is made to thesurviving spouse on a weekly basis. (Sullivan, R. Driedger on the Construction of Statutes (3rd), Butterworths (1994: Toronto), pp. 26 28). THE SURVIVING SPOUSE'S BENEFIT FOR DEPENDENTS Regulation 33 defines the IRB in subsection 146(1) of the Act. It does not define the IRB in s.146(5) that calculates the death benefit payable to surviving spouse for dependent children. Counsel for both parties agree that the calculation of the benefit payable to the surviving spouse for dependent children must be as stipulated in s. 136(1), that is, 5% of 90% of the victim's net income times the number of dependent children. Counsel support this position on the basis that Regulation 33 does not define the IRB in s. 146(5) as it does in s. 146(1). Thus, the only income replacement benefit that the Act could refer to is that as provided by s. 136. They conclude that, for the purposes of interpreting s.146(5), IRB is the same as "income replacement benefit". cannot agree with counsel. It is unnecessary to refer to s. 136(1) of the Act to calculate the death benefit payable to the surviving spouse for dependent children. Section 146 is complete within itself. Section 146(1) defines the IRB. Once that calculation is made, which must be done,( because the death benefit for dependent children is an additional benefit the surviving spouse is entitled to), the same IRB calculation is used for the formula specified in s. 146(5). There is no need to search elsewhere in the Act for the formula. While it may be unusual that Regulation 33 did not define the IRB for s.146(5) as well as for s. 146(1) of the Act, cannot construe s. 146(5) in the manner suggested by counsel. To do so would create an unnecessary inconsistency within s. 146 itself. Therefore, the preferable interpretation is the one that allows for s. 146 to work as unit. The IRB ascalculated in ss. 146(5) is the same as the IRB for inss. 146(1). CONCLUSION It is hereby ordered that SGI\'s decision is setaside. SGI is directed to recalculate and pay Mrs.Korpess the death benefit to her as a surviving spouseand for her two dependent children in accordance withthe directions of this court. Although I am entitled to award interest on thebenefits not paid (ss.198(4)), I grant the partiesleave to bring that matter back for further argument,if required.
The surviving spouse of the insured deceased, who died in a motor vehicle accident, took issue with the calculation of the death benefit paid for herself and her two children which had been reviewed and approved by SGI. At issue was whether the weekly income replacement benefit referred to in Division 5 of the Act had a separate and distinct meaning from the income replacement benefit in Division 4. HELD: SGI's decision was set aside and SGI was directed to recalculate and pay the death benefit to the surviving spouse and dependent children in accordance with the directions of the court.  1)The Interpretation Act requires legislation be given a fair, large and liberal construction to best assure the attainment of its objectives and that definitions given apply to the entire statute and regulations unless a contrary intention appears in the statute or regulations. 2)The phrase income replacement benefit (IRB) used in s136(1) is not analogous to the IRB in s146(1). There is no requirement to use the formula in s136(1) to calculate the surviving spouse's death benefit. S146(1) is a self-contained formula. 3)Because the Act is silent on a maximum yearly employment income the actual income earned is the sum that is used to determine the IRB in s146(1). The ordinary meaning of a death benefit being one-half the weekly IRB is that the payment is made on a weekly basis. 4)The IRB as calculated in s146(5) is the same as the IRB in s 146(1). 5)Leave was granted for the parties to bring the matter back, if required, with respect to the interest on benefits not paid.