IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Johnson v. Workers' Compensation Board,

 

2007 BCSC 1410

Date: 20070926
Docket: L052157
Registry: Vancouver

In the Matter of the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241
And In the Matter of the Workers' Compensation Act, R.S.B.C. 1996, c. 492
And In the Matter of a Decision of the Workers' Compensation Appeal Tribunal
WCAT - 2005-03622-RB

Between:

Gregory Allan Johnson

Petitioner

And

Workers' Compensation Board of British Columbia and
The Workers' Compensation Appeal Tribunal

Respondents


Before: The Honourable Madam Justice Gray

Reasons for Judgment

Counsel for the Petitioner:

F. Andrew Schroeder

Counsel for the Respondent:

Workers' Compensation Board

 

Scott A. Nielsen

Alan T. Howarth

Counsel for the Respondent:

Workers' Compensation Appeal Tribunal

 

Vladimir A. Pylypchuk

Date and Place of Hearing:

April 11, 12, 13, 2007

 

Vancouver, B.C.

INTRODUCTION

[1]                This is a judicial review proceeding under the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 ("JRPA").  On January 31, 2007, this proceeding was certified as a class proceeding under the Class Proceedings Act, R.S.B.C. 1996, c. 50 ("CPA").  It relates to claims by workers for payment by the Workers' Compensation Board ("WCB") pursuant to the Workers' Compensation Act, R.S.B.C. 1996, c. 492 ("WCA").

[2]                The class comprises all workers whose claims for interest on retroactive wage loss and pension awards were decided on or after November 1, 2001, a sub-class of which is those who were injured prior to November 1, 2001.

[3]                On October 15, 2001, a WCB panel of administrators passed what I will term the "New Interest Policy", regarding payment of interest.  The WCB refers to this as Policy Resolution No. 2001/10/15-03.

[4]                The New Interest Policy says that the WCB's discretion to pay interest on retroactive wage loss and pension lump sum payments will only be exercised where it is determined that "a blatant [WCB] error... necessitated the retroactive payment".  The New Interest Policy describes "blatant" as an "obvious and over-riding error" and states that an understandable error based on misjudgement is not a "blatant error".  The New Interest Policy provides that, where interest is paid, it will be at a rate equivalent to the prime lending rate of the banker to the government.  The New Interest Policy states that it is "effective November 1, 2001 and will apply to all decisions to award or charge interest on or after that date". 

[5]                The following two issues were certified as the common issues under the CPA:

(a)        whether the New Interest Policy is patently unreasonable in the face of s. 5 of the WCA; and

(b)        whether the New Interest Policy is retroactive and therefore ultra vires the statutory authority of the WCB.

[6]                The common issues proceeded to a three day hearing on affidavit evidence.

PROCEDURAL BACKGROUND

[7]                Effective May 7, 1984, the WCB Rehabilitation Services and Claims Manual detailed what I refer to as the “Old Interest Policy”.  It provided that the WCB would pay interest to injured workers on retroactive wage-loss and pension lump-sum payments where the benefit was for a condition which was previously overlooked or for which the WCB previously decided that no payment was due.  It provided that no interest would be paid unless the commencement date of the retroactive benefits was more than one year prior to the date the retroactive payment was being processed.

[8]                On August 15, 1985, the petitioner’s back was injured in a workplace accident.  He received wage loss benefits for the period ending December 20, 1985.  About 14 years later, on March 31, 1999, the petitioner had back surgery. He claimed that the 1999 surgery was the result of the 1985 workplace accident, and claimed wage loss benefits from the WCB.  In July 1999, a WCB case manager denied that claim.  The petitioner appealed to the WCB Review Board.  On September 21, 2001, the WCB Review Board allowed the petitioner’s appeal, but he was not immediately paid the benefits.   

[9]                On October 15, 2001, the WCB panel of administrators passed the "New Interest Policy".

[10]            In December 2001, the WCB paid the petitioner retroactive wage loss benefits for a period in 1999, but did not pay interest.

[11]            On May 17, 2002, the WCB wrote a letter to the petitioner's union advocate stating that the petitioner was not entitled to interest on his retroactive wage loss benefits as a result of the New Interest Policy.

[12]            The petitioner commenced an appeal of the May 17, 2002 letter with the WCB Review Board.  The petitioner's appeal was transferred to the Workers' Compensation Appeal Tribunal ("WCAT") (under the transitional provisions contained in Part 2 of the Workers Compensation Amendment Act (No. 2), 2002, S.B.C. 2002, c. 66, s. 38(1)).  The WCAT chair appointed a three-member panel under s. 238(6) of the WCA, which I will refer to as the “WCAT Precedent Panel”. 

[13]            On July 8, 2005, the WCAT Precedent Panel dismissed the petitioner's appeal.  In this proceeding, the petitioner seeks judicial review of the WCAT Precedent Panel decision on behalf of all class members.

WCAT DECISION

[14]            The WCAT Precedent Panel issued a unanimous written decision, which is 29 pages long (including a two-page summary).  The WCAT Precedent Panel considered the New Interest Policy to be a policy of the WCB board of directors, which s. 250(2) of the WCA requires WCAT to apply if applicable.

[15]            The WCAT Precedent Panel concluded that the wording of the New Interest Policy suggested that it should apply to all decisions about whether or not interest was payable made after November 1, 2001.  The WCAT Precedent Panel concluded that such an interpretation would have a retrospective effect, meaning that it would change the future effects of a past situation.  The WCAT Precedent Panel concluded that such an interpretation would not be retroactive, referring to changing past effects of a past situation.  As a result, the WCAT Precedent Panel did not address the common law presumption that legislation is not intended to be retroactive unless such construction is expressly, or by necessary implication, required by the language of the statute.  Similarly, the WCAT Precedent Panel did not consider the March 1, 1993 WCB policy on retroactivity of policy changes.

[16]            The WCAT Precedent Panel concluded that the decision to deny interest to the petitioner was made on December 4, 2001, when WCB advised him of the amount payable.  The WCAT Precedent Panel also concluded that the WCB Review Board finding of September 21, 2000, that the petitioner was entitled to wage loss benefits, left the question of interest to be adjudicated by a WCB officer because it did not mention interest.  The WCAT Precedent Panel determined that the petitioner's entitlement to interest had not been established prior to November 1, 2001, and that the July 1999 denial of benefits had been a question of judgment rather than a "blatant" error, so interest was not payable to the petitioner under the New Interest Policy.

[17]            The WCAT Precedent Panel concluded that the New Interest Policy applies to initial adjudicative decisions concerning interest made on or after November 1, 2001, but not to appeals where the initial adjudicative decision concerning interest was made prior to November 1, 2001.

[18]            The focus of the proceeding before the WCAT Precedent Panel was whether the decision was retroactive.  The WCAT Precedent Panel's reasons for decision do not discuss whether the New Interest Policy is patently unreasonable in the face of s. 5 of the WCA.  The decision includes the following

We do not consider the amended policy, and its retrospective application in the circumstances of the worker’s case, to be patently unreasonable.  We do not consider that grounds are established for referring the policy to the chair under section 250(1), as being ‘so patently unreasonable that it is not capable of being supported by the [WCA] and its regulations'.

LEGISLATION AND ROYAL COMMISSION

(a)        WCA

[19]            Workers' compensation is a system of compulsory no-fault mutual insurance administered by the state.  In B.C., the system is governed by the WCA.

[20]            Section 1 of the WCA defines "compensation" as "includes health care". 

[21]            Section 5 of the WCA provides as follows:

5(1)      Where, in an industry within the scope of this Part, personal injury or death arising out of and in the course of employment is caused to a worker, compensation as provided by this Part must be paid by the Board out of the accident fund.

(2)        Where an injury disables a worker from earning full wages at the work at which the worker was employed, compensation is payable under this Part from the first working day following the day of the injury; but a health care benefit only is payable under this Part in respect of the day of the injury.

[22]            Section 10(1) of the WCA bars legal actions by workers against other workers acting in the course of their employment or against employers within the scope of Part 1 of the WCA.  This provision has been described as the result of an historic trade-off by which workers gave up the right to sue in exchange for limited no-fault benefits.  Employers, in exchange for funding the entire system, were granted immunity from suit.

[23]            The WCA expressly provides for payment of interest in two situations.  First, s. 19(2)(c) provides for interest to those deceased workers' survivors whose benefits were discontinued by application of legislation later found to be unconstitutional.  Second, s. 258 provides for the payment of interest on payments that were deferred pending an appeal to WCAT.  There are no other provisions in the WCA specifically referring to payment of interest.

[24]            Sections 35(1), 55, 57, and 57.1 of the WCA are set out in Appendix A" to these reasons.  Section 35(1) provides that payments of compensation must be made periodically at the times and in the manner and form the WCB considers advisable.  Section 55 requires the worker to apply for benefits on a prescribed form and within one year after the date of injury, but gives the WCB discretion to pay benefits in certain circumstances even where the worker fails to do so.  Sections 57 and 57.1 permit the WCB to reduce or suspend payments of compensation when the worker fails to provide certain information or co-operate in certain ways.

[25]            Section 96(1) of the WCA provides that, except for certain rights to appeal to the WCAT, the decisions of the WCB are final and conclusive and not open to question or review in any court, and proceedings by or before the WCB must not be restrained by injunction, prohibition, or other process or proceeding in any court, or be removable by certiorari or otherwise into any court.  The Court of Appeal in Van Unen v. British Columbia (Workers' Compensation Board) (2001), 87 B.C.L.R. (3d) 277, 2001 BCCA 262 at para. 6 described the s. 96(1) privitive clause as follows:

...s-s. 96(1) of the Worker's Compensation Act establishes a complete and comprehensive privitive clause; nothing is left out.

[26]            Section 254 of the WCA provides that WCAT has exclusive jurisdiction to make decisions under Part 4 of the WCA, including appeals from decisions of the WCB.  Section 255 is a privative clause regarding decisions of the WCAT, which is similar to the s. 96(1) privative clause regarding decisions of the WCB. 

(b)       Administrative Tribunals Act

[27]            On June 30, 2004, the Administrative Tribunals Act, S.B.C. 2004, c. 45 ("ATA") was proclaimed.  Section 1 of the ATA defines "tribunal" as follows:

"tribunal" means a tribunal to which some or all of the provisions of this Act are made applicable under the tribunal's enabling Act.

[28]            Section 245.1 of the WCA, as amended by the ATA, lists the following provisions of the ATA as applying to WCAT:

Sections 1, 11, 13 to 15, 28 to 32, 35(1) to (3), 37, 38, 42, 44, 48, 49, 52, 55 to 58, 60(a) and (b) and 61.

[29]            Section 58 of the ATA sets out the standard of review that is applicable to WCAT.  It applies in this proceeding because of the  privative clause in s. 255 of the WCA.

[30]            Section 58 of the ATA is in relevant part as follows:

58(1)    If the tribunal's enabling Act contains a privative clause, relative to the courts the tribunal must be considered to be an expert tribunal in relation to all matters over which it has exclusive jurisdiction.

(2)        In a judicial review proceeding relating to expert tribunals under subsection (1)

(a)        a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable, ...

(3)        For the purposes of subsection (2) (a), a discretionary decision is patently unreasonable if the discretion

(a)        is exercised arbitrarily or in bad faith,

(b)        is exercised for an improper purpose,

(c)        is based entirely or predominantly on irrelevant factors, or

(d)        fails to take statutory requirements into account.

The definition of "patently unreasonable" in s. 58 may not be exhaustive and existing caselaw may be of assistance: University of British Columbia v. University of British Colmbia Faculty Association, 2006 BCSC 406, para. 50.

c)         1999 Royal Commission on Workers' Compensation
in British Columbia

[31]            The 1999 Royal Commission on Workers' Compensation in British Columbia, also known as the "Gill Report", included recommendation 48 that the WCA be amended to require the payment of interest on compensation for wage loss benefits, if the initial adjudication was delayed more than 60 days after the WCB received sufficient notice to consider the claim, and if the circumstances resulting in the delay were or ought to have been in the control of the WCB. 

[32]            Some of the other recommendations in the Gill Report were implemented by the legislature, but there was no specific amendment dealing with this question of interest.

CASE LAW

(a)        Statutory interpretation

[33]            The principles of statutory interpretation are set out by McLachlin C.J. in R. v. Sharpe, [2001] 1 S.C.R. 45, 2001 SCC 2 at para. 33:

... E.A. Driedger in Construction of Statutes (2nd ed. 1983) best captures the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87, Driedger states: "Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament." Recent cases which have cited the above passage with approval include: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21; R. v. Hydro-Québec, [1997] 3 S.C.R. 213, at para. 144; Royal Bank of Canada v. Sparrow Electric Corp., [1997] 1 S.C.R. 411, at para. 30; Verdun v. Toronto-Dominion Bank, [1996] 3 S.C.R. 550, at para. 22; Friesen v. Canada, [1995] 3 S.C.R. 103, at para. 10.

(b)       Workers' compensation legislation

[34]            The purpose of workers' compensation legislation was described by the Supreme Court of Canada in Pasiechnyk v. Saskatchewan (Workers' Compensation Board), [1997] 2 S.C.R. 890 at para. 27, 149 D.L.R. (4th) 577, as follows:

Montgomery J. also commented on the purposes of workers compensation in Medwid v. Ontario (1988), 48 D.L.R. (4th) 272 (Ont. H.C.). He stated at p. 279 that the scheme is based on four fundamental principles:

(a)        compensation paid to injured workers without regard to fault;

(b)        injured workers should enjoy security of payment;

(c)        administration of the compensation schemes and adjudication of claims handled by an independent commission, and

(d)        compensation to injured workers provided quickly without court proceedings.

See also Nova Scotia (Workers' Compensation Board) v. Martin; Nova Scotia (Workers' Compensation Board) v. Laseur, [2003] 2 S.C.R. 504, 2003 SCC 54 at para. 94.

(c)        Interest

[35]            The Supreme Court of Canada considered interest from a public policy perspective in Bank of America Canada v. Mutual Trust Co., [2002] 2 S.C.R. 601, 2002 SCC 43 at paras. 21, 22 and 36:

(1)        The Time-Value of Money

21.       The value of money decreases with the passage of time. A dollar today is worth more than the same dollar tomorrow. Three factors account for the depreciation of the value of money: (i) opportunity cost (ii) risk, and (iii) inflation.

22.       The first factor, opportunity cost, reflects the uses of the dollar which are foregone while waiting for it. The value of the dollar is reduced because the opportunity to use it is absent. The second factor, risk, reflects the uncertainty inherent in delaying possession. Possession of a dollar today is certain but the expectation of the same dollar in the future involves uncertainty. Perhaps the future dollar will never be paid. The third factor, inflation, reflects the fluctuation in price levels. With inflation, a dollar will not buy as much goods or services tomorrow as it does today (G. H. Sorter, M. J. Ingberman and H. M. Maximon, Financial Accounting: An Events and Cash Flow Approach (1990), at p. 14). The time-value of money is common knowledge and is one of the cornerstones of all banking and financial systems.

...

(4)        Interest as Compensation

36.       In The Law of Interest in Canada (1992), at pp. 127-28, M. A. Waldron explained that the initial theory underpinning an award of judgment interest was that the defendant's conduct was such that he or she deserved additional punishment. The modern theory is that judgment interest is more appropriately used to compensate rather than punish. At pp. 127-28, she wrote:

Compensation is one of the chief aims of the law of damages, but a plaintiff who is successful in his action and is awarded a sum for damages assessed perhaps years before but now payable in less valuable dollars finds it quite obvious that he has been shortchanged. Equally obviously, payment of interest on his damage award from some relevant date is one way of redressing this problem.

The overwhelming opinion today of Law Reform Commissions and the academic community is that interest on a claim prior to judgment is properly part of the compensatory process.

[36]            The issue of the availability of interest on retroactive worker's compensation awards has been considered by two maritime appeal courts.  The issues in those cases were different from each other and from the case at bar, but the decisions are of interest.

[37]            The earlier case is Whitlock v. Prince Edward Island (Workers' Compensation Board) (2000), 196 Nfld. & P.E.I.R. 113, PESCAD 25, a decision of the Prince Edward Island Supreme Court - Appeal Division.  In that case, the PEIAD required payment of interest. 

[38]            Ms. Whitlock was receiving benefits from the P.E.I. workers’ compensation board (“PEI WCB”) as the widow of a worker. She remarried in 1985 and the PEI WCB discontinued her benefits. In 1998, the PEI WCB realized that the termination of benefits was contrary to the Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 (the "Charter").  It paid Ms. Whitlock the benefits it had withheld, but refused to pay any interest. The PEI WCB policy was to pay interest only in the case of a staff error.

[39]            The PEIAD held that the refusal to pay interest was unreasonable and directed that the PEI WCB pay the interest  on the retroactive award necessary to fully restore Ms. Whitlock’s benefits to the value they would have had if they had been paid as they became due.  Mitchell J.A., writing for the majority, stated, at para. 7, that the applicable Act consituted a complete code with respect to workers’ compensation, and there was no gap for the common law to fill and no statutory provision directing payment of interest on overdue or delayed benefits.  Mitchell J.A. held that the PEI WCB had the discretion to pay interest, and that the discretion had to be exercised in accordance with the boundaries of the statute, the principles of the rule of law, the fundamental values of Canadian society, and the Charter.

[40]            Mitchell J.A. wrote at para. 9, that “...the defect in the respondent’s decision is so obvious I would be prepared to find it patently unreasonable if that were the applicable standard.”  At para. 12, the learned judge went on to conclude that the decision of the PEI WCB to adhere to its interest policy in that case was “unreasonable, contrary to the tenets of good public administration and contrary to the purposes of the Act”, and that

[t]he decision not to pay any interest was manifestly inconsistent with the [PEI WCB’s] earlier decision that it was under a legal obligation to retroactively restore [Ms. Whitlock’s] benefits to the date of their termination, and it [failed] to recognize the confiscatory effect on [Ms. Whitlock's] benefits of not paying interest at least at the rate of inflation.

[41]            Mitchell J.A. found that the PEI WCB had no discretion concerning the amount or timing of widow’s benefits as they were fixed by the applicable Act, and that for the PEI WCB to rely simply on the absence of a staff error as a basis for denying interest at least at the rate of inflation in that case, was not only unreasonable but patently so.

[42]            The later case is Boyle Estate v. Nova Scotia (Workers' Compensation Appeals Tribunal) (2004), 225 N.S.R. (2d) 69, 2004 NSCA 88, a decision of the Nova Scotia Court of Appeal. 

[43]            In Boyle Estate, supra, the Nova Scotia Workers’ Compensation Board (“NS WCB”) denied interest on a retroactive award based on an alleged Board policy to pay no interest.  The Nova Scotia Workers’ Compensation Appeals Tribunal (“NS WCAT”) reversed that decision, but the Nova Scotia Court of Appeal allowed the NS WCB’s appeal and set aside the award of interest.

[44]            The NS WCB had historically maintained a position that it would not pay interest in any circumstances. That position was not embodied in a “policy” as defined in the applicable legislation.

[45]            The NSCA held at para. 37 that “the plain meaning of 'compensation' clearly includes interest.” However, the court referred to s. 10(1) of the applicable Act, which stated that the NS WCB “shall pay compensation to the worker as provided by this Part.”  The NSCA held that the last five words of that sentence qualified the power to order “compensation”.

[46]            The NSCA then went on to consider the nature of the qualification. It held that an analysis of the scheme and context of the applicable act pointed to the interpretation that any compensation must be in a category expressly permitted elsewhere in the applicable Part of the legislation.  It reviewed that Part, and in particular, s. 10(7), which provided that the NS WCB may prescribe rates, types, and durations of compensation.

[47]            The NSCA found that “compensation” in s. 10(1) included both the benefits specified in Part I, and expanded benefits specified in regulations for which authorization was provided by Part I of the Act.  The court concluded that the legislation contemplated that the NS WCB, through the regulation or policy-making process, maintains some control over the expansion or refinement of specified benefits.

[48]            The NSCA considered the terms of the Nova Scotia legislation, which provided for an indexing factor based on one half of the percentage change in the consumer price index for the preceding year, and concluded that this indexing contemplated that benefits would not fully account for changes in the real value of money.  The court considered that this result is inconsistent with the rationale of compensatory interest at common law, but was the legislature’s chosen premise for the operation of the accident fund.

[49]            At para. 54, the court expressed the following concern:

... the WCB has a duty to maintain the [the Accident] Fund's ability to satisfy benefits ... it could be exceedingly difficult to rate the risk, calculate the assessments and predictably maintain the Fund solvency.  Because the Act directs that the Fund be solvent, the Act controls the benefits payable from the Fund.

[50]            In conclusion, the NSCA held, at para. 72, as follows:

Any entitlement to interest must be found in the Act or in the regulations and policies authorized by the Act.  Absent such a provision, interest is not "compensation...as provided by this Part" within section 10(1).

[51]            Therefore, the NSCA held there was no discretion available in the NS WCB or in the NS WCAT to order interest which had not been specified in the Nova Scotia Act, a regulation or policy.

ANALYSIS

a)         Standard of Review

[52]            The threshold question on an application for judicial review is the appropriate standard to be applied to the decision in question.  Only after the standard of review is determined can an administrative tribunal's reasons be scrutinized.

[53]            All counsel argued that the standard of review applicable to the decision of the WCAT Precedent Panel is patent unreasonableness. 

[54]            Section 251(1) of the WCA provides that WCAT "may refuse to apply a policy of the board of directors only if the policy is so patently unreasonable that it is not capable of being supported by the [WCA] and its regulations".  This section came into effect on March 3, 2003 (B.C. Reg. 320/02), prior to the decision of the WCAT Precedent Panel which is under review. 

[55]            As a consequence of s. 251(1) and the standard of review, the question for this court is whether the WCAT Precedent Panel's failure to find the New Interest Policy to be so patently unreasonable that it is not capable of being supported by the WCA and its regulations, was itself a patently unreasonable decision.  This is a very high standard for the petitioner to meet.

[56]            For a decision to be patently unreasonable, the court must find it to be "openly, evidently, clearly unreasonable": see Speckling v. Workers' Compensation Board (2005), 46 B.C.L.R. (4th) 77, 2005 BCCA 80 at para. 33; Canada Safeway Ltd. v. WCB (1998), 59 B.C.L.R. (3d) 317 at paras. 11 and 23 (C.A.); and Badesha v. WCB (1991), 48 Admin. L.R. 302 (B.C.S.C.).  A patently unreasonable decision is one that is not in accord with reason or is clearly irrational: Canada (Attorney General) v. PSAC, [1993] 1 S.C.R. 941, 101 D.L.R. (4th) 673 at 690.

[57]            In Davidson v. British Columbia (Workers' Compensation Board) (2003), 17 B.C.L.R. (4th) 372, 2003 BCSC 1147 at paras. 47-49, Masuhara J. distinguished "patent unreasonableness" from "unreasonableness" as follows:

The patently unreasonable test requires that a decision under review to be "openly, evidently, clearly" unreasonable.  In Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, Iacobucci J. stated at para. 57:

The difference between "unreasonable" and "patently unreasonable" lies in the immediacy or obviousness of the defect.  If the defect is apparent on the face of the tribunal's reasons, then the tribunal's decision is patently unreasonable.  But if it takes some significant searching or testing to find the defect, then the decision is unreasonable but not patently unreasonable.

In Canada Safeway Ltd. v. British Columbia (Workers' Compensation Board) (1998), 59 B.C.L.R. (3d) 317 at para. 23, application for leave to appeal dismissed, [1999] S.C.C.A. No. 20:

The Appeal Division may have arrived at its decision by questionable reasoning but it is the result which must be tested for patent unreasonableness.

If a rational basis can be found for the decision, then it should not be disturbed simply because of defects in the tribunal's reasoning: Kovach v. British Columbia (Workers' Compensation Board) (1998), 52 B.C.L.R. (3d) 98 (C.A.) per Donald J.A., aff'd [2000] 1 S.C.R. 55, 2000 SCC 3.

See also Wyant v. British Columbia (Workers' Compensation Board), 2006 BCSC 680 at paras. 35-36.

[58]            The Supreme Court of Canada described the distinction between reasonableness and correctness in similar terms in Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20 at paras. 50, 55 and 56, which are as follows:

50.       At the outset it is helpful to contrast judicial review according to the standard of reasonableness with the fundamentally different process of reviewing a decision for correctness. When undertaking a correctness review, the court may undertake its own reasoning process to arrive at the result it judges correct. In contrast, when deciding whether an administrative action was unreasonable, a court should not at any point ask itself what the correct decision would have been. Applying the standard of reasonableness gives effect to the legislative intention that a specialized body will have the primary responsibility of deciding the issue according to its own process and for its own reasons. The standard of reasonableness does not imply that a decision-maker is merely afforded a "margin of error" around what the court believes is the correct result.

...

55.       A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere (see Southam, at para. 56). This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation even if this explanation is not one that the reviewing court finds compelling (see Southam, at para. 79).

56.       This does not mean that every element of the reasoning given must independently pass a test for reasonableness. The question is rather whether the reasons, taken as a whole, are tenable as support for the decision. At all times, a court applying a standard of reasonableness must assess the basic adequacy of a reasoned decision remembering that the issue under review does not compel one specific result. Moreover, a reviewing court should not seize on one or more mistakes or elements of the decision which do not affect the decision as a whole.

b)         New Interest Policy and s. 5 of the WCA

[59]            The position of the class is that "compensation" includes interest on a retroactive wage loss or pension award where there has been a denial of benefits by the WCB and a resulting delay in the payment of benefits.  The class argued that the WCB's refusal to pay interest is a patently unreasonable interpretation of the statutory entitlement.

[60]            The decision under review is the decision of the WCAT Precedent Panel in applying the New Interest Policy.  The WCAT Precedent Panel did not find the New Interest Policy to be patently unreasonable.  The WCAT Precedent Panel did not consider whether the New Interest Policy was patently unreasonable in the face of s. 5 of the WCA.  The focus of argument before the WCAT Precedent Panel, and of the reasons for decision, was whether the decision was retroactive.  As a result, the decision does not provide any analysis of the intersection between s. 5 of the WCA and the New Interest Policy.

[61]            The question for the court is whether it was patently unreasonable for the WCAT Precedent Panel to conclude that the New Interest Policy was not itself patently unreasonable.  In order to answer this question, the court must consider whether it is it patently unreasonable for the New Interest Policy to distinguish between claims on the basis of whether the WCB error was a question of misjudgment or was a blatant error, particularly in light of s. 5 of the WCA.  

[62]            I first consider the points raised in argument supporting the New Interest Policy; next various provisions of the WCA; and finally, the two maritime appellate decisions.

i)          Argument

[63]            It was suggested in argument that the New Interest Policy was reasonable for three reasons: first, it would ensure adequate funding of the accident fund; second, it would provide some incentive for the WCB to take due care in assessing claims for compensation; and third, the nature of the evidence-gathering in workers' compensation claims often results in unavoidable delays in paying claims.

[64]            Ensuring adequate funding of the accident fund is a legitimate concern for the WCB board of directros.  The WCA provides in s. 82(2) that the board of directors is responsible for establishing policies to ensure adequate funding of the accident fund, among other things.  Pursuant to s. 84(1), a director exercising the powers and performing the functions and duties as a member of the WCB board of directors, must act with a view to the best interests and objectives of the worker's compensation system. 

[65]            The WCA provides for only partial consideration of the effects of inflation on workers' awards.  Section 25 of the WCA provides that payments must be adjusted annually to the rate of inflation, less 1%, although the adjustment cannot exceed 4% or go below zero percent.  This indexing is more generous to the worker than the 50% indexing in the Nova Scotia legislation considered in Boyle Estate but is less than the actual rate of inflation.

[66]            This indexing protects workers from the fact that their compensation is based on their earnings at the time of injury, even though if they continued to work, their salary would likely increase at least at a rate related to inflation.  This may also address to some extent the effect of inflation on delayed payments.  However, indexing does not address the other factors accounting for the depreciation in the value of money, being opportunity cost and risk.  The need of a worker to borrow or liquidate capital to meet ongoing expenses are two examples of the opportunity cost of delayed payments.

[67]            The concern to ensure adequate funding of the accident fund, in light of s. 25 of the WCA, would justify an interest policy that provides less than full compensation to workers for delayed payment.  However, it does not provide any basis for distinguishing between workers on the basis of whether the error of the WCB was "blatant" or otherwise.

[68]            The claimants will suffer equally from not having the funds available to them, whether the disentitlement arose from blatant error, from a judgment call on considering complex medical evidence, or for some other reason. 

[69]            For the purpose of paying interest, theoretically at least, requiring the WCB to pay interest in cases of "blatant error" could provide a modest incentive to the WCB to avoid such errors.  Even though the WCB is a non-profit entity, individual decision-makers within the WCB might be motivated to avoid such errors because they will be more obvious and embarrassing when there is a tangible result like payment of interest.

[70]            However, if that theory is correct, and requiring payment of interest for "blatant" errors is a disincentive to committting such errors, then providing that the WCB does not need to pay interest on misjudgments provides an incentive for the WCB to delay decisions involving judgment calls.  During a period while such decisions are unresolved, the WCB has the use of funds without any corresponding responsibility to compensate the worker.  This result is contrary to one of the fundamental purposes of workers' compensation legislation, to provide compensation to injured workers quickly without court proceedings, as mentioned in Pasiechnyk, supra, at para. 27.

[71]            The WCB argued that evidence considered by a Review Board may include evidence that was not available at the time of the original decision disentitling the claimant to benefits.  In fact, in the petitioner's circumstances, a physician wrote a letter in 1999.  About two years later, the Review Board asked the physician to clarify the letter.  Fifteen days following that clarification, the Review Board allowed the appeal and held that the petitioner was entitled to benefits. 

[72]            This argument might support a policy that distinguishes between claims in which new evidence resulted in a new decision and claims where the new decision was based on existing evidence, but does not justify a distinction of the basis of the type of error made by the WCB.

ii)         WCA Provisions

[73]            Section 5(1) of the WCA provides that the WCB must pay compensation to the worker in certain circumstances.  Section 5(2) provides that “compensation is payable under this Part from the first working day following the day of the injury”. The term “payable” has two meanings in the New Oxford Dictionary of English, Oxford University Press, 1998.  One meaning is “required to be paid; due”, and the other meaning is “able to be paid”.  Other sections of the WCA, such as ss. 55 and 57, provide that in certain circumstances “no compensation is payable.”  Considering the purposes of the WCA and the words of the legislation, the word “payable” in s. 5(2) means that compensation is required to be paid under Part 1 from the first working day following the day of the injury.

[74]            In other words, s. 5(2) of the WCA contemplates timely payments.  If compensation is not provided "from the first working day following the date of injury", there has been not payment of "compensation as provided by this Part" pursuant to s. 5(1) of the WCA.  However, later sections of the WCA provide limitations.

[75]            Section 35 provides that payments of compensation must be made periodically at the times and in the manner and form the WCB considers advisable. This permits the WCB to make decisions regarding interest, so long as they are consistent with the legislation.

[76]            Sections 57 and 57.1 provide for suspension of compensation when a worker has failed to cooperate by providing information or following reasonable medical advice. These provisions suggest that the WCB can take into account the conduct of a worker in determining payment of compensation.

[77]            Section 82 of the WCA permits the WCB board of directors to set and revise as necessary, policies respecting compensation.  The WCAT may refuse to follow policies if they are so patently unreasonable that they are not capable of being supported by the WCA and its regulations.

[78]            There is nothing in the WCA or its regulations that supports a policy which distinguishes between workers on the basis of the kind of error made by the WCB. The WCA might permit a policy which distinguishes between workers based on the conduct of the worker, which would be consistent with ss. 55, 57, and 57.1.  However, there is nothing in the WCA which suggest that the conduct of the WCB, or its difficulties of decision-making, should govern which workers are paid interest.

iii)        Maritime Appellate Decisions

[79]            The decisions of the maritime appellate courts discussed earlier are of interest, although neither one is binding or directly on point.

a.         Whitlock

[80]            In Whitlock, supra, the PEI AD held that it was patently unreasonable not to pay interest to Ms. Whitlock.  The PEI WCB had denied interest on the basis of its standard policy according to which interest is only payable in the case of a staff error.

[81]            WCAT argued that Whitlock is distinguishable from the present situation for four reasons, which I will consider in turn.

[82]            First, WCAT argued that the case was distinguishable because the P.E.I. statute provided for a right of appeal on a standard of unreasonableness.  In contrast, the question under judicial review in this case is whether it was patently unreasonable for the WCAT Precedent Panel to in turn conclude that the New Interest Policy was itself not patently unreasonable. 

[83]            This point is an accurate distinction.  However, the majority in Whitlock wrote, at para. 9, that the defect in the WCB’s decision was so obvious that the court would be prepared to find it patently unreasonable if that were the applicable standard.

[84]            Second, WCAT argued that another distinction between the B.C. WCA and that of P.E.I. is that only the B.C. WCA has a cost of living index increase.

[85]            The reasons of the appeal court in Whitlock do not discuss whether there was a provision for a cost of living increase.  The B.C. WCA provides for a cost of living increase through the indexing in s. 25, but the indexing factor applied to compensation will ordinarily be 1% less than the change in the consumer price index for Canada.  As a result, it does not fully compensate for inflation.  However, the existence of indexing is irrelevant to distinguishing between workers on the basis of the type of error made by the WCB.

[86]            Third, WCAT argued that the specific situation addressed in the Whitlock case, of a widow disentitled to benefits contrary to the Charter, is a situation where interest is specifically provided for in s. 19(2)(b) and (c) of the British Columbia WCA.

[87]            While that is a factual difference, it does not address the nature of the appellate court’s reasoning. The court was considering a policy of denying interest except in cases of staff error. The analysis depends on the unreasonableness of such a policy generally, not only as it applied to widows disentitled to benefits contrary to the Charter.  The B.C. legislation specifically provides for interest payments to disentitled widows.  However, the court’s reasoning in the face of a policy that denied interest in cases of staff error is what is of interest.

[88]            Fourth, WCAT argued that the British Columbia WCA limits compensation to "compensation as provided by this Part", language not referred to by the PEIAD.  That is also an accurate distinction.  However, once the WCB has chosen to create an interest policy, WCAT must consider whether it is capable of being supported by the WCA and regulations.

[89]            In short, Whitlock is not binding, but is an appellate decision in which the court concluded that a policy was patently unreasonable which provided that the PEI WCB paid interest only if it made a staff error.

b.         Boyle Estate

[90]            The decision of the Nova Scotia Court of Appeal in Boyle Estate is also of interest.  The court held that the plain meaning of the term "compensation" clearly includes interest, but that the legislation limited the compensation payable to what was "provided in this Part".

[91]            The WCA uses similar language regarding compensation.  However, the WCA provides in s. 5(2) that "compensation is payable under this Part from the first working day following the day of the injury".  This would seem to imply that a worker should receive interest if not paid compensation when payable. 

[92]            The reasons in Boyle Estate are of limited assistance because of the different question under review in that case.  The alleged "policy" under consideration in Boyle Estate was one that did not allow for the payment of interest in any case.  The NSCA first concluded that it was not in fact a "policy" of the NS WCB Board of Directors because it did not meet the statutory requirements of the legislation.  The court then went on, at paras. 72 and 74, to consider whether the NS WCB should have awarded interest in any event under Part 1 of the applicable legislation, and concluded that:

... Any entitlement to interest must be found in the Act or in the regulations and policies authorized by the Act.  Absent such a provision, interest is not "compensation...as provided by this Part" within section 10(1).

...

I am not commenting on the differently worded Workers' Compensation legislation of other provinces.  Under Nova Scotia's Act, the compensation is only payable 'as provided by this Part'.  The WCB's discretion under the Nova Scotia Act, is to choose whether or not to enact a regulation or adopt a policy under the enabling provisions of the Act to authorize interest.  There is no 'discretion' in the WCB or in WCAT to order interest which has not been specified in the Act, a regulation or policy.

[93]            Therefore, the NSCA did not state that interest could not be paid at all under the applicable legislation.  Rather, it concluded that the NS WCB had the discretion to either award interest or not.  Having chosen to not award interest at all, the NS WCB was entitled to maintain that position in all claims. 

iv)        Discussion

[94]            The New Interest Policy provides for payment of interest where there was a "blatant error" by WCB staff.  As a result, the question is whether it is patently unreasonable for the New Interest Policy to distinguish between workers on the basis of the type of error made by the WCB for the purpose of paying interest.

[95]            Like the NSCA in Boyle Estate, I conclude that the plain meaning of "compensation" in s. 5 of the WCA includes interest, and that the term is qualified by the phrase "as provided by this Part", referring to Part 1 of the WCA.  Section 5(2) provides that compensation is "payable" under Part 1 from the first working day following the date of injury.  The term "payable" is used in the sense of "required to be paid", but is subject to the other terms of Part 1.

[96]            Part 1 includes s. 35, providing that payments must be made periodically at the times and in the form the WCB considers advisable.  That section does not appear to give the WCB discretion over the amount of payment, but by giving discretion over the timing of payment, gives the WCB some discretion regarding interest.

[97]            Sections 55, 57 and 57.1 provide for situations in which compensation is either not payable or may be reduced.  Those situations are all ones where there has been fault or non-cooperation by the worker, through failing to apply in the prescribed form in a timely way (s. 55), failing to cooperate with a medical examination or failing to follow reasonable medical advice (s. 57), or failing to provide the WCB with necessary information (s. 57.1).

[98]            There is nothing in Part 1 which provides that compensation is not payable in situations involving erroneous judgement calls by the WCB.

[99]            The board of directors is empowered by s. 82(1) of the WCA to set policies respecting compensation, and as a result, may set policies regarding interest.  Section 251(1) permits the WCAT to refuse to apply a policy of the board of directors if the policy is so patently unreasonable that it is not capable of being supported by the WCA and its regulations.

[100]        The New Interest Policy determines entitlement to interest on the basis of the type of error made by WCB.  There is nothing in the WCA which suggests that it is appropriate to take into account the WCB's conduct in determining what compensation is payable.  The WCB's conduct is simply irrelevant to determination of what compensation a worker will receive. 

[101]        Like the PEIAD in Whitlock, I conclude that a policy which bases entitlement to interest on whether there has been a WCB staff error of the type required by the policy is patently unreasonable.

[102]        The class has met the very high standard of review.  The New Interest Policy is not capable of being supported by the WCA and its regulations, and it was patently unreasonable for the WCAT to conclude otherwise.  The fact that the WCAT Precedent Panel was not provided with argument concerning the effect of s. 5 of the WCA helps to explain how it fell into this error.

RETROACTIVITY

[103]        As a result of my conclusion on the first issue, it is unnecessary to consider the issue of retroactivity. 

CONCLUSION

[104]        In oral argument, Mr. Schroeder, class counsel, agreed with the submissions of the WCB and WCAT that the proper remedy was to refer the decision to the WCAT Precedent Panel for reconsideration.  Mr. Schroeder suggested that the court could give some direction on what interest policy would be lawful.

[105]        The common issue has been determined, that the New Interest Policy is patently unreasonable in the face of s. 5 of the WCA.  It was patently unreasonable for WCAT to fail to conclude that the New Interest Policy is so patently unreasonable that it is not capable of being supported by the WCA and its regulations.  The procedure the WCAT must follow in such circumstances is set out in s. 251 of the WCA.

[106]        In my view, it is not appropriate for the court to give further direction about what interest policy might be lawful.  There may be several potential policies which would be capable of being supported by the WCA and its regulations.

[107]        As a result, the WCAT Precedent Panel must reconsider the petitioner's appeal in light of the determination that the New Interest Policy is so patently unreasonably that it is not capable of being supported by the WCA and its regulations.  The question of remedy for any other class members may be the subject of further submissions.

[108]        Section 37 of the CPA suggests that ordinarily there will be no order as to costs in a class proceeding, although there are exceptions to that.  Unless the parties have submissions to make on the issue of costs, there will be no order as to costs.

"The Honourable Madam Justice Gray"

APPENDIX "A"

1.         Sections 35(1), 55, 57, and 57.1 of the WCA are as follows:

35(1)    Payments of compensation must be made periodically at the times and in the manner and form the Board considers advisable, and, in the case of minors or persons of unsound mind who the Board considers are incapable of managing their own affairs, may be made to the persons that the Board thinks are best qualified in all the circumstances to administer the payments, whether or not the person to whom the payment is made is the legal guardian of the person in respect of whom the payment is being made.

...

55 (1)   An application for compensation must be made on the form prescribed by the Board or the regulations and must be signed by the worker or dependant; but, where the Board is satisfied that compensation is payable, it may be paid without an application.

(2)        Unless an application is filed, or an adjudication made, within one year after the date of injury, death or disablement from occupational disease, no compensation is payable, except as provided in subsections (3), (3.1), (3.2) and (3.3).

(3)        If the Board is satisfied that there existed special circumstances which precluded the filing of an application within one year after the date referred to in subsection (2), the Board may pay the compensation provided by this Part if the application is filed within 3 years after that date.

(3.1)     The Board may pay the compensation provided by this Part for the period commencing on the date the Board received the application for compensation if

(a)        the Board is satisfied that special circumstances existed which precluded the filing of an application within one year after the date referred to in subsection (2), and

(b)        the application is filed more than 3 years after the date referred to in subsection (2).

(3.2)     The Board may pay the compensation provided by this Part if

(a)        the application arises from death or disablement due to an occupational disease,

(b)        sufficient medical or scientific evidence was not available on the date referred to in subsection (2) for the Board to recognize the disease as an occupational disease and this evidence became available on a later date, and

(c)        the application is filed within 3 years after the date sufficient medical or scientific evidence as determined by the Board became available to the Board.

(3.3)     Despite section 96 (1), if, since July 1, 1974, the Board considered an application under the equivalent of this section in respect of death or disablement from occupational disease, the Board may reconsider that application, but the Board must apply subsection (3.2) of this section in that reconsideration.

(4)        This section applies to an injury or death occurring on or after January 1, 1974 and to an occupational disease in respect of which exposure to the cause of the occupational disease in the Province did not terminate prior to that date.

...

57 (1)   The Board may require a worker who applies for or is in receipt of compensation under this Part to be medically examined at a place reasonably convenient for the worker. If the worker fails to attend for the examination or obstructs the medical examiner, the worker's right to compensation is suspended until the examination has taken place, and no compensation is payable during the period of suspension.

(2)        The Board may reduce or suspend compensation when the worker

(a)        persists in insanitary or injurious practices which tend to imperil or retard his or her recovery; or

(b)        refuses to submit to medical or surgical treatment which the Board considers, based on expert medical or surgical advice, is reasonably essential to promote his or her recovery.

57.1     (1)        A worker who applies for or is receiving compensation must provide the Board with the information that the Board considers necessary to administer the worker's claim.

(2)        If a worker fails to comply with subsection (1), the Board may reduce or suspend payments to the worker until the worker complies.